Year End Gift Planning

Year End Gift Planning
One of the best ways to avoid the federal estate tax is to make gifts before you die, so that the money or property is not in your estate when you die.  For the year 2009 the Internal Revenue Code allows a donor to give away up to $13,000 in money or property to each individual donee; a married couple can give away up to $26,000 per year per donee.

By way of example, a married couple with 3 children and 6 grandchildren could, in one year, give each child and grandchild $26,000, for a total gift of $234,000.  This amount is completely removed from the donor’s estate, thus reducing the amount of the estate that is potentially subject to the federal estate tax. 

Because we are coming to the end of 2009 there is an opportunity to make a gift before the end of the year and another gift on or after January 1 using the gift tax exclusion for 2010 for the second gift.  In the example above, it would thus be possible to give away money or property valued at $468,000 within a period of several weeks without incurring any gift tax.

With 2009 coming to a close individuals with estates that might otherwise be subject to the federal estate tax should give serious consideration to taking advantage of the annual gift tax exclusion and establishing an annual gift program as part of their estate planning.  Every year that goes by without gifts is another lost opportunity.

— Kevin Palmer


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