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Gifting and Taxes

Thinking about making a Gift to your son or daughter or grandchild? Has a family member passed away recently?

Gifts are a valuable estate planning tool.

Between now and December 31st, you might want to take advantage of this year’s gift tax rules as part of your year-end planning.

 

RULES TO NOTE:

  • You can give up to $13,000 to anyone, gift-tax-free, this year.  You and your spouse can combine your individual annual exclusions and make gifts up to $26,000 to one recipient.  (For 2013, the annual exclusion will go up to $14,000 per person)
  • Through December 31st, 2012 you can make lifetime gifts of up to $5.12 million without having to pay any gift tax.  This is the basic lifetime estate and gift tax exclusion, which is likely to change beginning 2013.
  • Under the current law, the basic exclusion is calculated by the sum of gifts you make during your lifetime and the assets you leave to your heirs at your death.  In 2012, the exclusion amount is $5.12 million before estate and gift taxes apply or $10.24 million if you are married.

 

SPECIAL RULES:

Also keep in mind some gifts have special rules.  Education and medical expenses you pay directly to the providers do not reduce your annual exclusion.  For example, if you are a grandparent who is thinking about assisting with the cost of your grandchild college tuition, then make payment directly to the institution rather than your grandchild.

 

FREQUENTLY ASKED QUESTIONS:

My client’s most frequently asked questions are in regards to transferring personal property (i.e. cabins, lake homes, land, principle residences).  The following are a couple common situations when gifting comes up:

  • Dad and/or mom are moving out of his/her home
    and into a nursing home
  • A parent has passed and the son wants to buy out
    his sister’s share of the farm

 

Please feel free to contact Sean Riley at sriley@cpafirm.cc to further discuss these
or other types of giving.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

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