Once you have enough assets to provide for yourself and your spouse, consider making gifts to your children and grandchildren. Savvy strategies will reduce your taxable estate yet not expose you to any gift tax.
Medical bills. You can make unlimited payments for someone else’s health care and no gift tax will be due.
Education bills. You also can pay tuition bills for private school and for higher education, tax-free.
To take advantage of these “med-ed” gift tax exceptions, you must send checks directly to the health care providers and the schools.
In fact, you can pay multiple years of tuition directly to the school, if you want to get more assets out of your estate right away. This tactic is acceptable as long as the child has been accepted at the school.
The catch? You probably won’t get any refund if the child stops attending that school.