In a former blog post, we discussed how you can make $14,000 yearly donations to children, grandchildren and others in order to lower your taxable estate and avoid estate tax. Today, we will explore paying for education expenses for your kids and grandkids, another option for lowering your taxable estate to get it down below or near the current $5.3 million (single persons) and $10.6 million (married persons) federal estate tax exemption levels. This option can be used in conjunction with yearly donations to speed up the process of removing assets from your estate.
Paying for tuition on behalf of your children and grandchildren is a great way to lower you taxable estate. From college to pre-k to any other education tuition payment, these are all considered tax exempt gifts not subject to the $14,000 limit, as long as certain conditions are met. First of all, only payments for tuition are tax exempt. Things like room and board, books, or other supplies are not exempt. These payments can be made to almost any educational institution at any level – from nursery school to graduate school and applies to both traditional and non-traditional education settings. The student may be enrolled full- or part-time at any educational organization with a regular faculty and curriculum and a student body that meets on a regular basis at a certain place. The key is you must pay the educational institution directly. You cannot give money to the student, then have them pay their own tuition, if you did the gift would not be exempt. So remember, it you need to lower your estate value look for ways to educate your family, not only will they benefit from gaining more knowledge and skill, but they will also pay less tax when you are gone.
To discover how to avoid estate taxes for your family and other options for lowering your taxable estate, 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.