The Time for Gifting
Making gifts to family and charity doesn’t have to be a year-end chore.
BY MADELAINE HAWKINS
Assistant Vice President
With the new year comes new gift tax exemptions. Though the gift-giving season has just ended, it is never too early to start planning for the upcoming year. The IRS has increased the annual gift tax exemption from $16,000 per person to $17,000 per person in 2023. The lifetime gift exemption has also increased from $12.06 million to $12.92 million, meaning you can give up to these limits without tax consequences. Giving during your lifetime allows you to witness the recipient enjoy their gift. Additionally, making annual gifts can reduce the amount of your taxable estate at your death.
Giving to family and friends is not the only strategy to lessen your taxable estate. Charitable gifts are not subject to the gift tax. At the end of the year, charitable giving is at an all-time high. One-third of philanthropic donations are given in the last quarter of the
year, with most contributions made in December.
Although many people rush to complete year-end gifts for tax purposes, research shows that tax benefits are generally not a prime motivation for giving. Donors usually give for more personal or philanthropic reasons. Yet, one of the most significant challenges is identifying what causes donors care about and where to donate. If you fall into this category, now is a great time to explore what you are passionate about and what organizations align with your values.
If you have already identified a favorite charity, speaking with the organization about getting more involved or setting up a planned gift are ways to become more intentional with your contributions. Being thoughtful about where and how you give can impact the charities you choose to support and influence your family. Parents’ charitable contributions tend to affect their adult children’s philanthropic contributions. Giving throughout the year allows loved ones to observe your contributions and ignite their giving spirit.
Whether you are motivated by tax benefits or sharing your wealth, there is no need to wait for the end of the year. You can start now and enjoy the effects of your generosity. It is important to speak with your financial advisor about your desire to give to your loved ones during your lifetime and your philanthropic intent, so they can assist you in giving most advantageously.
Madelaine Hawkins works in TCO’s Oklahoma City office and is pursuing the Chartered Advisor in Philanthropy designation, which will benefit our work with charitable organizations and their donors.