Print Page   |   Contact Us   |   Sign In   |   Register
Personal Gifting

Personal gifting to friend, family members and individuals (including Trusts) is limited to $14,000 annually per tax payer and beneficiary.

  • These gifts are not tax deductible to the giver. Their purpose is provide support and/or reduce the size of an estate that might be subject to Estate taxes in the future.

  • Cash gifts are not taxable to the recipient.

  • Gifts of appreciated assets are not taxed to the recipient until the asset is sold. Upon sale, capital gains tax will be owed on any profit in excess of what the original giver paid.

  • Payment of tuition directly to a learning institution or medical expenses paid directly to a provider—DO NOT count towards the $14,000.

  • Accelerated gifting applies to 529 plans. Up to 5 years of annual gifting limits can be made up front. The assets leave the estate over the relevant time period. In theory this upfront funding allows the gift to appreciate outside of the estate.

  • You can gift more than $14,000 annually per tax payer and beneficiary, but must file a Gift Tax Return. In aggregate, each tax payer has a total lifetime exclusion of $5,250,000 between their estate and gifts over the $14,000 annual limit per beneficiary over their lifetime without triggering Gift or Estate Taxes.

  • Gifts may be in cash or appreciated assets. Consider gifting appreciated assets rather cash; particularly when the recipient would taxed at lower capital gains rates than the giver. The holding period and cost basis and holding period on the asset are determined by when the giver purchased the asset and how much was paid. Be sure to provide that cost basis information along with the gift.

Work with a professional if you want to use a gifting strategy to transfer the ownership of real estate, business interests and other sizeable assets. Some sophisticated mechanisms include:

  • Qualified Personal Residence Trusts

  • Family Limited Partnerships

  • Intentionally-defective Grantor Trusts

  • Discounts for gifting business interests

The purpose of these strategies is to reduce any Estate taxes.

 

<NEXT: Charitable Giving>



Search
Sign In
Sign In securely
Home

My Plan

Join a Group

ADV Part II


F.A.Q.

Blogs

 

Where should I save?

 Where should I invest?