Utilizing your Annual Gift Tax Exclusion
Post by: Lesley Hempfling
Generally, if you make a gift to someone, you, as the donor, are responsible for paying any gift taxes that may be due on such transfers or for filing any returns (where taxes are not due). However, any gifts that are within the "annual gift tax exclusion" do not require the filing of a gift tax return. The annual gift tax exclusion for 2015 is $14,000.00 per person. That means that you may gift up to $14,000.00 per person (per donee) without the requirement of filing a gift tax return. Many people use the annual exclusion as a way of decreasing the value of their estate for estate tax purposes, without "dipping" into their lifetime gift tax exclusion. Of course you could just write a check to each of your grandchildren at Christmas or on their birthdays and call it a day, or you may look at other planning opportunities, a few outlined below:
- Gift shares equal to the annual exclusion of closely held stock to children and grandchildren;
- Gift an amount equal to the annual exclusion into a trust for your children or grandchildren;
- Use the annual exclusion to pay for premiums to fund an Irrevocable Life Insurance Trust ("ILIT");
- Gift funds into a 529 account for children or grandchildren - special rules allow you to gift up to 5 years worth of annual exclusions at once.
Our Austin lawyer Lesley Hempfling can help with your estate planning documents and tell you more about gift tax exclusions.