When it comes to ‘sharing the wealth’ with loved ones, there is a myriad avenues to explore. As of this tax year, the IRS is permitting individuals to allocate up to $18,000 annually (or $34,000 for married couples filing jointly) in cash, investments, or property to each recipient, free from any gift tax implications.

You’ve worked hard in your life and earned a great amount of wealth to show it. Should the notion of bestowing these financial blessings upon your children or even any newborn grandchildren, cross your mind, looking into the Uniform Gifts to Minors Act or The Uniform Transfers to Minors Act (commonly abbreviated as UGMA/UTMA) is a prudent step. The details of these acts vary by state of residence. Essentially, establishing an account empowers you to initiate a savings or investment vehicle under the child’s name, with an adult designated as the custodian. Each parent or grandparent holds the prerogative to contribute up to $18,000 annually sans any gift tax ramifications. Control over the assets transitions to the child upon attaining the age of majority, typically at age 18.

With this type of strategy, the initial $1,100 per year of unearned (investment) income remains exempt from taxation. For minors or college students below 24, any unearned income falling within the bracket of $1,100 to $2,200 is subject to taxation at the child’s applicable rate, while any income surpassing $2,200 is taxed at the parent’s rate. As for individuals aged 18 or older, or college students aged 24 or older, the entirety of their income is taxed at their own rate.

By strategically bestowing a tax-savvy financial gift upon an adult child, you could potentially assist them in realizing aspirations such as homeownership or maximizing contributions to an employer-sponsored retirement scheme. Our Wealth Advisors are here to assist you in doing just this. Such an expert can facilitate a comprehensive assessment of your unique circumstances, enabling informed decisions regarding the most suitable gifting strategies to pursue. Don’t wait! Schedule an appointment today.