Lifetime Gifts May Have Significant Tax Advantages

An estate planning attorney can help you develop a plan that maximizes your assets and helps you take advantage of the estate and gift tax system.  If you are considering leaving an asset to someone upon your death, you may be interested in learning about the tax benefits of an “inter vivos” gift.  An inter vivos gift is a gift that is transferred during the giver’s lifetime.

Lifetime gifts have several tax advantages.  These advantages are particularly helpful to individuals whose estate will likely be subject to federal estate taxation.  Also, lifetime gift plans are particularly important for people whose estates will exceed the applicable estate tax exclusion ($3.5 million for decedents dying in 2009).

The main advantage of an inter vivos gift is that some, or all, of the gift may not be subject to transfer tax.  The Internal Revenue Code provides that individuals may make gifts of $13,000 per year per donee without incurring gift tax liability and without having to file a gift tax return.

In addition, interspousal gifts provide the donee spouse with an adequate estate and also allow the donee spouse to use his or her annual exclusions and estate and gift tax exclusion amounts.  The gift tax marital deduction is unlimited for a donee spouse who is a United States citizen.  For non-citizen spouses, there is an inflation adjusted annual gift tax exclusion that totaled $128,000 in 2008.

For more information about lifetime gifts, please contact us.  Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results.  While this post may include legal issues, it is not legal advice.  Use of this site does not create an attorney-client relationship.