There is one misconception about tax law that I hear more than any other. Clients always tell me, “I heard if I give $14,000 to my kids each year, it will reduce the amount of taxes they have to pay when I die”. This statement is only true for families with large amounts of money. In fact, that statement only applies to .04% of families in the U.S. Under the current system, only estates over roughly $5.3 million for single people and $10.6 million for married couples will have to pay any estate taxes to the federal government. For Louisiana families with less than those amounts, the family will not incur estate taxes from neither the federal government nor the Louisiana State government.
So when you donate $14,000 to your kids each year, this action often has no practical effect other than you giving up control over your funds. Typically, we never advise clients to donate assets directly to their kids for that very reason. You lose control, and your children’s divorces, lawsuits, or bankruptcies can make those funds disappear. Instead, we urge Louisiana residents to maintain control of their assets until death so that they can make sure the money is there if they need it! So remember, there is no need to donate money to your kids each year if you are not a multi-millionaire.
To discuss the best way to transfer wealth to your family through professional Louisiana Estate Planning, call (504) 274-1980 in the Metairie and New Orleans Area or call (985) 246-3020 in Mandeville, Covington, Slidell, Houma, Thibodaux, and surrounding areas.