Planning the Right Gift

There are many ways of making gifts to family members and to charities and, if the gift is done right, you may be able to avoid taxes. Here are just a few ideas to discuss with your estate planning attorney:

Annual exclusion gifts

There is no gift tax on gifts that do not exceed a certain amount ― the limit in 2013 is $14,000. Your attorney can help you coordinate gifts of real estate, stocks, or any other assets, by gifting a portion of the asset each year.

The lifetime exemption

If you gift more than the annual exclusion, you need to file a gift tax return but do not necessarily need to pay gift taxes on that amount. Up to $5,250,000 in gifts made during your lifetime are exempt.

Giving to your spouse

You may gift any amount you wish to your spouse, either during your lifetime or after death through your will or trust. Although there is no limit to the amount you can give them without it being taxed, there is one condition ― since the IRS is not keen on widows (or widowers) leaving the country with loads of cash that can’t be taxed when they die, your spouse must be a U.S. citizen for the unlimited marital deduction to apply.

Tuition and medical payments

There is no limit to the amount you can gift for tuition and medical payments, so long as the gift is paid directly to the educational institution or health facility.

How to benefit personally from giving to charity

When you give to charity during your lifetime, you get an income tax deduction. When you give to charity after your death through a bequest in your will or trust, you get a deduction for estate tax purposes. There is no limit to these amounts.

There are many more ways of giving to charity than simply giving an outright bequest. For example, you can give to a charity by means of a pooled income fund or charitable remainder trust, get the deduction and receive an income stream for your lifetime ― or for a specific number of years. Gift an asset that has appreciated in value since you purchased it and get the extra benefit of not having to pay capital gains tax on the appreciation (neither does the charity).

Talk to an experienced Staten Island estate planning attorney to help you make just the right gift. Armstrong & Lamberti, PLLC has been serving individuals and couples in the New York area for more than 40 years and our lawyers are happy to use their experience for your benefit.