Gift Tax Bugaboo

A common misconception I run into is that people believe they may only give away $10,000 worth of assets without paying gift tax. 

The reality is that you may make gifts of up to $1 million during your lifetime without paying gift tax.  In addition, you may leave additional assets to individuals (other than a spouse) at death without paying estate tax.  Transfers to your spouse -- either during lifetime or at death -- are not subject to gift or estate tax.

In addition to gift-tax free transfers of $1 million, you may also give $13,000 (it went up in 2009) per year per donee without using any of your $1 million gift tax exemption.  However, you should be aware that gifting can have negative income tax consequences which may catch you off guard.  Before you embark on a gifting program, you should review it with your tax advisor to develop a strategy appropriate for your situation. 

Elizabeth A. Perry has been helping Clark County residents with their estate planning since 1976.  Her practice emphasizes estate planning, probate, guardianships and Medicaid planning.  She can be reached at (360) 816-2485.  www.RevocableLivingTrustsLawyer.com

(The above should not be construed as specific legal advice and is intended for general information purposes only.)