An individual can give up to $13,000.00 a year in cash or assets tax free to as many people as he chooses under the current gift tax laws. The annual limit does not allow you to vary over “unused” gifts-so either you use it or lose it before the end of the year.
Whenever an individual gives more than $13,000.00 a year to one beneficiary, he must file a gift tax return for the amount which is more than $13,000.00. For example if a woman gives her nephew $15,000.00 in one year, she would fill out a gift-tax return for $2,000.00 (the amount in excess of the yearly tax-free gift of $13,000).
Over the course of a lifetime each individual can give up to five million dollars tax free (the law is scheduled to revert back to one millions dollars in 2013).Gifts made to individuals in an estate plan are included in that one million dollar exemption. Only the amounts in excess of the annual $13,000.00 are included in that million dollar lifetime total because the annual gifts of $13,000.00 are not included. Gifts must be made by December 31st to qualify for this year’s annual gift.
Getting Legal Help
Giving is an important piece of estate planning. Experienced Estate Planning Attorney Elga Goodman can help you prepare an estate plan which protects your assets and your loved ones. Call us today at 973-841-5111.