Also, the child named on the account would gain control once they reach a specified age governed by state rules, which in many states is 18. UTMAs allow for greater investment options but they do not provide tax-free accumulation. Also, if the grandparent dies during that 5-year period, the contributions for any remaining years would be brought back into their estate.Ī parent or grandparent can use a custodial (UTMA) account to facilitate gifts for a child. Trade Offs: Front-loading a 529 plan means the grandparent can’t make any more excluded gifts to the grandchild during those 5 years. You may front-load a 529 college savings plan by giving 5 years’ worth of annual gifts of $16,000 at once, for a total of up to $80,000 per person, per beneficiary without paying a gift-tax or chipping away at the lifetime gift tax exclusion. Make sure to alert your CPA and note any annual exclusion gifts you may be making. If you’re married, you and your spouse can make combined gifts of $32,000 to a particular individual. This means, you may give up to $16,000 to as many people as you’d like gift-tax free. In 2022, the annual federal gift tax exclusion per individual is $16,000. The end of the year is undoubtedly the busiest time of the year for many people, and we believe it is important to make sure your Estate Planning affairs do not get lost in the chaos.īelow is our guide to help you through the key tasks to check off your list before the new year.
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