Business & Personal Checking Accounts – MutualBank

 

To Gift or Not to Gift...

To Gift or Not to Gift...

The good news is that you can annually gift up to $13,000 to as many individuals you choose and it will forever escape all Federal estate tax. The bad news is this is an often-misunderstood concept that can influence people to part with substantial amounts of their nest eggs unnecessarily.  

I often overhear a random conversation where someone of an advanced age is telling another that they are giving $13,000 to a relative because it is “tax-free.” I shudder to think how they became acquainted with the idea that they must part with their liquid assets or Uncle Sam will “get every last penny!” While it is true that Federal estate taxes can be a tremendous burden on business owners and large estates, it is also a fact that a very small percentage of our population will ever owe Federal estate tax. As it stands today through the end of 2012, one can exclude up to $5 million of assets from Federal estate taxes at death ($10 million per married couple). Although the laws may change (if nothing is done, the exclusion will revert to $1 million per person in 2013), most people will never approach the assets required to be concerned about owing estate tax. If you expect to have in excess of $5 million in assets (or $1 million if you believe the laws will change in 2013), gifting $13,000 per year to various family members or friends can provide you with a simple, low-cost way of reducing your taxable estate as well as seeing your loved ones enjoy these gifts during your lifetime.

Here’s how it works: Let’s say you have $6 million and want to reduce your estate below the $5 million exemption. If you have five children and ten grandchildren, you could gift each one of them $13,000 or $195,000 per year (15x$13,000). In approximately five years, you would have gifted roughly $1 million and accomplished your goal of getting your estate below the $5 million exemption without paying for sophisticated planning strategies. You could have doubled this amount to $390,000 per year by gifting to their spouses as well which would have allowed you to reach your goal in half the time. The gifted assets are removed from your estate forever, and the beneficiary of the gift receives them free of any tax consequence. Amounts given annually to any individual beyond $13,000 must be reported to the IRS.

For example, if you gave an individual $100,000, $13,000 would not need to be reported, but the remaining $87,000 would be and would begin to reduce the individual’s $5 million lifetime allowance ($1 million after 2012) that is free from gift tax. In this example, the $87,000 reported to the IRS would be taxable to the giver at date of death, but any appreciation would remain estate tax free. It is important to familiarize yourself with these rules as gifting remains one of the most misunderstood areas in personal finance.

So, the next time you or a loved one are approached with the idea of giving away your money in order to protect your assets from Uncle Sam, make sure you are armed with the basic information you need in order to fully understand if gifting is appropriate, given your financial situation. It is always a good idea to consult your attorney or trusted financial adviser when devising a gifting or any other estate tax minimization strategy.

Shayne Nagy, CTFA
Senior Vice President
Trust and Investments 


Contact a Representative Today

Back to Education Resources

Mutual News
  • MutualFirst Financial, Inc. Declares Cash Dividend

    MUNCIE, INDIANA – MutualFirst Financial, Inc....

    Friday, August 21, 2015

    READ ARTICLE

View Archived Releases
Mutual Blog

Personal Social Media Account Security

For many of us, social media has become a part of our everyday lives and helps us conveniently keep tabs on the people and topics we care most about.

Recently however, there has been an increase of social media account take overs by cybercriminals. As stated in the media, one contributing factor in some of the social media account takeovers has been the use of weak passwords.


Tips for creating a stronger password:


  • Passwords should typically:
    • be at least 8 characters in length
    • contain at least 1 number
    • contain at least 1 special character (!@#$$%)
    • contain both upper and lower case characters.
  • Do not use your name, date of birth, maiden name, mother’s maiden name, address, or other easily guessable words for passwords. 
  • Another way to create a strong password is to use a series of words that do not relate to each other. For example, JumpingFastRelaxStop!#.

 


Social media additional security options:


Another way to help avoid social media account takeover is to use the additional security options available. Two-factor authentication adds an extra layer of security that drastically decreases your chances of account takeover. Two-factor authentication is essentially the using of two separate components to verify your identity, the combination of something you HAVE with something you KNOW. A good example of two-factor authentication you most likely are already used to is withdrawing cash from an ATM, for example. Having both your debit card AND knowing a pin number is required to complete the withdrawal and protect your identity.

A popular and convenient two-factor authentication method is using a combination of both an online password and a text message verification sent to your phone. Enabling this type of authentication typically follows this process:

  1. Enter your password into Facebook or another website
  2. Immediately receive a text on your phone with a temporary pass key
  3. Enter the passkey received back on the site/app and you’re logged in

This may seem like overkill, but enabling this two-factor authentication will drastically decrease the chances of your social accounts being hacked. And actually, the process of setting up and using this authentication is pretty simple and convenient.

 


How to enable two-factor authentication:


Many popular social networks like Facebook, Twitter, LinkedIN, and others already support two-factor authentication. To learn more about how to do so on the most popular sites on the web, be sure to check out this article:

http://socialcustomer.com/2014/04/how-to-enable-two-factor-authentication-on-50-top-websites-including-facebook-twitter-and-others.html

Wednesday, April 22, 2015

READ BLOG ENTRY

View Archived Posts

Connect with us:

(800) 382-8031

  • Facebook
  • Youtube
  • twitter
  • RSS Feed
 
 
To Gift or Not to Gift...

To Gift or Not to Gift...

The good news is that you can annually gift up to $13,000 to as many individuals you choose and it will forever escape all Federal estate tax. The bad news is this is an often-misunderstood concept that can influence people to part with substantial amounts of their nest eggs unnecessarily.  

I often overhear a random conversation where someone of an advanced age is telling another that they are giving $13,000 to a relative because it is “tax-free.” I shudder to think how they became acquainted with the idea that they must part with their liquid assets or Uncle Sam will “get every last penny!” While it is true that Federal estate taxes can be a tremendous burden on business owners and large estates, it is also a fact that a very small percentage of our population will ever owe Federal estate tax. As it stands today through the end of 2012, one can exclude up to $5 million of assets from Federal estate taxes at death ($10 million per married couple). Although the laws may change (if nothing is done, the exclusion will revert to $1 million per person in 2013), most people will never approach the assets required to be concerned about owing estate tax. If you expect to have in excess of $5 million in assets (or $1 million if you believe the laws will change in 2013), gifting $13,000 per year to various family members or friends can provide you with a simple, low-cost way of reducing your taxable estate as well as seeing your loved ones enjoy these gifts during your lifetime.

Here’s how it works: Let’s say you have $6 million and want to reduce your estate below the $5 million exemption. If you have five children and ten grandchildren, you could gift each one of them $13,000 or $195,000 per year (15x$13,000). In approximately five years, you would have gifted roughly $1 million and accomplished your goal of getting your estate below the $5 million exemption without paying for sophisticated planning strategies. You could have doubled this amount to $390,000 per year by gifting to their spouses as well which would have allowed you to reach your goal in half the time. The gifted assets are removed from your estate forever, and the beneficiary of the gift receives them free of any tax consequence. Amounts given annually to any individual beyond $13,000 must be reported to the IRS.

For example, if you gave an individual $100,000, $13,000 would not need to be reported, but the remaining $87,000 would be and would begin to reduce the individual’s $5 million lifetime allowance ($1 million after 2012) that is free from gift tax. In this example, the $87,000 reported to the IRS would be taxable to the giver at date of death, but any appreciation would remain estate tax free. It is important to familiarize yourself with these rules as gifting remains one of the most misunderstood areas in personal finance.

So, the next time you or a loved one are approached with the idea of giving away your money in order to protect your assets from Uncle Sam, make sure you are armed with the basic information you need in order to fully understand if gifting is appropriate, given your financial situation. It is always a good idea to consult your attorney or trusted financial adviser when devising a gifting or any other estate tax minimization strategy.

Shayne Nagy, CTFA
Senior Vice President
Trust and Investments 


Contact a Representative Today

Back to Education Resources

Contact Us
Mobile Capture

24 Hour MutuaLine:

765-747-2931 or 800-289-4376

© MutualBank | Member FDIC | Privacy Policy