To Gift Or Not To Gift: That Is The Question

For many years, the general rule of thumb in estate planning has been that an individual should gift assets during his or her lifetime. Lifetime gifting can offer many benefits. Most significantly, any future appreciation in the gifted asset is removed from the estate.

In 2015, an individual can transfer up to $5.43 million during his or her life without incurring any gift tax liability. This amount is often referred to as the "exemption amount," and it is indexed yearly for inflation. Upon death, the exemption amount translates into an estate tax exemption, meaning that $5.43 million (also indexed for inflation), less what has been used during the individual's lifetime by making gifts, can pass free of estate tax.