Estate planning isn’t just about how you want your assets distributed after you pass away. It’s about deciding how much you want to give away while you are still alive. For those with large estates, the use of lifetime gifts may have significant benefits both now and for your estate. For those seeking to provide significant advance help to loved ones and charity, it is important to consider the role and implications of lifetime gifts.
The gift tax is assessed on the value of property that is gifted from one person to someone other than their spouse. The amounts allowed for annual gifts and lifetime maximums above the annual amount are frequently changing. You can generally move tens of thousands of dollars each year without any tax consequences. Thus, with proper planning, lifetime gifts may help decrease the size of large estates and minimize estate taxes, as well as to provide an additional benefit to loved ones and charity.
How Epiphany Law Can Help
The estate planning attorneys at Epiphany Law are experienced with the rules of gift tax and gift planning. We pride ourselves on understanding your specific circumstances and planning for lifetime gifts in a way that minimizes taxes and meets your wishes.
If you have questions about lifetime gifts, or think they could be beneficial, contact and Epiphany Law estate planning attorney today.
Questions and Answers
Q. What is an annual exclusion gift?
A. The annual exclusion is the maximum yearly amount a person can give and be exempt from federal gift tax. Each year, a person can give up to the annual exclusion amounts, and married couples can combine their annual exclusion amounts without incurring gift tax liability. Amounts gifted above the annual exclusion are accumulated and are limited by a lifetime maximum amount over the annual exclusion.
Q. I received a significant parcel of property as a gift. Do I need to pay a gift tax?
A. No! The gift tax, if applicable, is imposed upon the person giving the gift, not the person receiving the gift. As the recipient, you will have different tax consequences. You will have to report any gain or loss on the property according to income and gift tax rules. Talk to an experienced estate planning attorney for more information, as these rules are complicated.
Q. How do I keep records of gift property?
A. There are several methods for keeping track of gift property, and you should speak with an experienced attorney about your specific case. Some things you will need to know are the donor’s costs basis on the property and information regarding the purchase, such as the date of purchase.