Are you ready for gift-giving season? It may already have arrived, at least from a tax perspective. Between now and December 31, you can take advantage of this year’s gift tax rules as part of your year-end planning.
Here are two ways to transfer assets.
The annual exclusion. You can give up to $13,000 to anyone, gift-tax-free, this year. You and your spouse can combine your individual annual exclusions and make gifts of up to $26,000 to a single recipient. (For 2013, the annual exclusion will be $14,000 per person.)
Some gifts have special rules. For instance, education and medical expenses you pay directly to the respective providers do not reduce your annual exclusion.
The lifetime exclusion. Through December 31, you can make lifetime gifts of up to $5.12 million without paying gift tax. The reason: This is the basic lifetime estate and gift tax exclusion, which is likely to change beginning next year.
Under current law, the basic exclusion is the sum of gifts you make during your lifetime and the assets you leave to your heirs at your death. In 2012, that amount can be as high as $5,120,000 before estate or gift tax applies. When you’re married, you can double the exclusion, to a maximum of $10,240,000.
Gift-giving is a valuable estate planning tool. Please call to schedule an appointment for discussing these or other types of giving, including charitable gifts and gifts made in trust.