Elder Law with Frank and Mary: Happy Holidays! This year, treat yourself – and others

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The holidays are a time to show gratitude for all our blessings, and a time of gifting. This year, consider giving yourself a gift in the form of an increased RMD (required minimum distribution) from your tax-deferred plans. Here’s why: 

  • Taking the funds out gradually as a larger amount each year may save on federal income taxes if/when you need to qualify for MassHealth. If you wait until you suddenly need to qualify, you will be taxed on all of the funds at once. 
  • If these funds are ultimately going to go to your children, then you may end up giving them more after-tax dollars by pulling out the funds, paying the tax, and making a gift, than you would by waiting until you died and having them have to take the money out and pay the income tax at their higher rate. 

Remember: 

  • There is no Massachusetts gift tax, and any amount you gift now will be subtracted from your taxable estate for estate tax purposes after you die.
  • At the federal level there is no gift tax unless, over your lifetime, you give more than the federal estate tax exclusion amount (now $12,060,000 but increasing to $12,920,000 next year), which for most people this does not come into play. 
  • Unless you owe a federal gift tax, there is no penalty for failure to file a federal gift tax return. 

So consider increasing that $16,000 (increasing to $17,000 maximum in 2023) you were going to give to each of your children this year, but remember to keep enough to take care of you!

For more information, visit Frank and Mary’s YouTube channel, youtube.com/elderlawfrankandmary. These programs also air on MVTV (Comcast 13), along with “Frank and Mary on Martha’s Vineyard,” where Sandie Corr-Dolby and I address common issues facing seniors, and available resources. If you have any questions, please contact me at 508-860-1470, or abergeron@mirickoconnell.com.

Arthur is an elder law attorney in the trusts and estates group at Mirick O’Connell.

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