Gifting Strategies for Estate Planning

The federal government imposes a substantial tax on gifts of money or property that exceed certain levels. Without such a tax, someone with a sizable estate could give away a large portion of his or her property before death and escape death taxes altogether. For this reason, the gift tax acts more or less as a backstop to the estate tax. And yet, few people actually pay a gift tax during their lifetime. A gift program can substantially reduce overall transfer taxes; however, it requires good planning and a commitment to proceed with the gifts.

Advantages of Gift Giving

You may have many reasons for making gifts -- for some gift giving has personal motives, for others, tax planning is what motivated them. Most often, you will want your gift-giving program to accomplish both personal and tax motives. A few reasons for considering a gift-giving plan include:

• Assisting someone in immediate financial need

• Providing financial security for the recipient

• Giving the recipient experience in handling money

• Seeing the recipient enjoy the property

• Taking advantage of annual exclusion allowance

• Paying gift tax now to reduce overall taxes later

• Giving tax advantaged gifts to minors 

Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, or investment advice.  Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary therefore, the information should be relied upon when coordinated with individual professional advice.

To the extent any of the material on this Web Site contains an opinion on one or more Federal tax issues, such opinion cannot be relied upon and cannot be used for the purpose of avoiding penalties.  If you would like a written opinion on one or more of the Federal tax issues addressed on this Web Site or the material enclosed upon which you can rely for the purpose of avoiding penalties you should contact a licensed lawyer.  Nothing contained on this Web Site & none of the documents you are given through this Web Site  are or should be interpreted as legal or tax advice. You should not take any action upon anything contained on this Web Site or any of the documents you are given on this Web Site unless and until you first discuss the individual fact situation with an attorney licensed in your state who is knowledgeable in Federal tax issues and the tax issues relative to the state in which you reside.