Gift-giving season may not be over yet

Shawn Mercer
The Union-Recorder

January 04, 2007 10:24 pm

— Now that the holidays have passed, and the decorations are all boxed up and put away, you may think that the gift-giving season has come to a close. But before you settle back into the routine and put off thoughts of presents until the end of the year, you should consider the advantages of an investment-related gifting strategy. Now is a good time to weigh your options and explore the benefits of using lifetime gifts to pass on some of your assets to your
beneficiaries.
During your lifetime and at the time of your death, federal gift and estate taxes, respectively, can apply to the transfer of property to your heirs. However, there are exclusions for these rules, and it’s important to think about how these could benefit you when making gifts. To help give you a better idea, we’ll first take a closer look at what the exclusions are and how they are applied.
For starters, the gift tax annual exclusion allows you to transfer up to $12,000 per recipient per year without having to pay any federal gift tax. The government has no limits on who or how many people you can give a gift to. Simple math will also show you that a married couple can make a gift of up to $24,000 per recipient per year.
These limits refer to the annual exclusion; they do not prohibit you from giving more, if you choose. But if you exceed the annual exclusion amount, you begin using up what’s known as your lifetime “gift tax applicable exclusion.” This exclusion allows an individual to make gifts in excess of the annual exclusion of up to $1 million. Again, the exclusion would be double that, or $2 million, for married couples. Once your gifts have reached those limits, any additional gifts will be subject to normal gift tax rates.

For full story, please see the Jan. 5, 2007 edition of The Union-Recorder.