Earlier this week I posted about how the tax code incentivizes you toward the old-fashioned way to make your first $5 million: Inherit it.
That’s because, at least until December 31st, the first $5 million you receive through estate inheritance comes to you tax free.
I was trying to point out that there’s no better way to get ahead in life, as the tax code tends to take your money away if you are so foolish as to, you know, actually work for a living.
But, as the Wall Street Journal reminds us today, there’s an even better way to make your first $10.24 million, at least until the law changes or gets updated on December 31st.
An expiring but very generous lifetime federal gift-tax exemption allows individuals (presumably your parents) to gift you up to a maximum of $5.12 million each[1], without paying any taxes on it. This works like the better-known $13,000 annual gift tax-exemption, except your parents can only take advantage of it once.
This is far better than the estate tax gift I mentioned earlier in the week.
You see, the downside of inheriting $5 million is that somebody close to you has to die first. That’s kinda sad, and it’s also hard to count on, timing wise. You might need the $10 million, like, right now. But fortunately, because of this generous lifetime gift exemption, your living parents can start you off right in life, like, right now.
So, Richie Rich, you have no time to lose because the tax code either reverts to a $1 million lifetime exemption per person[2] next year, or Congress passes a law to extend the gift-exemption.
I think its time to be nice to your parents again.
And if that doesn’t work, get on the phone with your Congressman and get him to extend that exemption.
“Either way, Daddy, start writing checks!”[3]
[1] Hence, the $10.24 million total, $5.12 million from each parent
[2] $2 million if both your parents maximize their lifetime exemption.
[3] as I once heard a classmate at Harvard say, un-ironically, when she didn’t get into the prestigious dormitory of her choice
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