Lifetime Gifting Analysis

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Check it out at this link! Originally created for the post: ‘Ultimate Guide to Death and Taxes’

What it is

It’s a simple set of projections designed to figure out how much money you might be able to gift to your children, free of estate taxes, over the course of your lifetime.

Why I created it

I was investigating the rules around ‘gifting’ to children (as part of my post on the Ultimate Guide to 529 College Savings Plans) and learned a lot about the annual gift tax exclusion, and the lifetime gift tax exemption. After running the numbers on my potential future wealth (using the lifetime earnings calculator), I realized that it was possible the assets I leave behind would exceed the lifetime gift tax exemption, and be subject to the top marginal tax rate. I believe in the importance of everyone paying taxes, but I have no interest in paying more than my legal share. Given that, I wanted to understand how much wealth I could legally gift over the course of my lifetime in order to minimize those future inheritance taxes.

How you can use it

Review and understand the analysis on the sheet. Make a copy of your own if you like. If you believe the core assumption I’ve made – that the annual and lifetime gift exemptions will increase at ~2% per year – then you’ll be able to calculate the ballpark amount of money you can pass on tax free at death as part of your lifetime gift exemption (I estimate it might be increased to as much as $15-20M by ~2070). You’ll also be able to get an idea of how much money you could pass on to your children, grandchildren, or friends through the annual gift tax exclusion – I estimate over 60 years of gifting you could pass on more than $20M tax free, assuming two children and four grandchildren.

Go do!

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