Will Form 3520 Beneficiaries 2023-2024

Welcome to our segment on gift and estate taxes. I'm going to start off by talking about gift taxes in the United States. It's the person giving the gift that's liable for any gift tax, not the recipient. So, we get an annual gift tax exclusion. Basically, this means that we can give $14,000 to an unlimited number of people. That means I could give $14,000 each to ten different people, and there would be no tax and no reporting. I don't have to file anything, the recipient doesn't have to file anything, and there's no tax on either side. Now, what happens if that gift exceeds $14,000? Any gifts above $14,000 will start eating into your lifetime gift tax exclusion. The lifetime gift tax exclusion is a $5.43 million dollar exclusion that you can gift tax-free throughout your lifetime. These $14,000 annual gifts do not reduce your lifetime gift tax exclusion. So, what happens if I give more than $14,000 during the year to one individual? Let's say I give $114,000 to one of my friends. The $14,000 is completely tax-free and doesn't need to be reported anywhere. However, the $100,000 gift is going to reduce my lifetime gift tax exclusion from $5.43 million to $5.33 million. I'm also going to have to file a gift tax return to report to the IRS that I've used part of my lifetime gift tax exclusion, and it's now been reduced by $100,000. If during my lifetime I ever use up my entire lifetime gift tax exclusion of $5.43 million, any gifts over and above that will be taxed at 40%. Now, let's move on and talk about estate tax. As Americans, we're required to pay estate tax on the fair market value of our worldwide estate. Worldwide estate means assets located...