Recommendations & StrategiesQuestion 72 of 100
A high-net-worth client asks how to reduce estate taxes through lifetime giving. The adviser should mention:
a.That gifts always trigger immediate income tax to the recipient
b.That there is no annual gift exclusion
c.The annual gift tax exclusion, which allows tax-free gifts up to a set amount per recipient each year
d.That gifting is prohibited under securities law
Explanation
The annual gift tax exclusion permits gifts up to an indexed amount per recipient each year without using the lifetime exemption or incurring gift tax. Systematic gifting can reduce the taxable estate over time. Recipients generally do not owe income tax on gifts.
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