Give Now or Later? A Tax-Savvy Tip for Giving Assets
Tax Tip:
If you’re planning to give assets to loved ones, and federal gift and estate taxes aren’t a concern, think about the capital gains impact. Inherited assets receive a “step-up” in basis to their fair market value at your death, potentially resulting in much lower taxes if your heirs sell them. Gifts, however, keep your original basis, which can mean higher taxable gains for the recipient. If your heirs are in a high tax bracket, holding onto highly appreciated assets until death may be best. But if they’re in a lower bracket and you want to divest appreciated assets, gifting now could save the family money — the assets might sell at a lower tax cost, possibly even zero. Careful timing of gifts and inheritances can help you pass on more wealth and pay less tax.
This material is generic in nature. Before relying on the material in any important matter, users should note date of publication and carefully evaluate its accuracy, currency, completeness, and relevance for their purposes, and should obtain any appropriate professional advice relevant to their particular circumstances.
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