orange county living trust estate plan

Get started now on your Estate Plan. Free Design Meeting and free review of your existing plan.

Family Protection Clinic

Learn about Estate Planning and Self-Defense, win prizes, at our FREE Family Protection Clinic.

Family Protection Clinic

gun trust

Learn how gun trusts can help avoid Accidental Felonies and pass on your Firearm Legacy.

You need a gun trust! $99

The LawNews.TV Letter

Sign up for the LawNews.TV Letter and get our free eBook: "Estate Planning for California Gun Owners"

The LawNews.TV Letter

Gift Tax and Exclusions

A.  Gift Tax

Without the gift tax, families could avoid estate tax by making lifetime transfers to children, and gifts to children in a lower income tax bracket could reduce income tax as well.  To the extent gift tax applies, these goals are frustrated.

The gift tax is imposed on lifetime transfers of property for less than adequate and full consideration in money and money’s worth.  A transfer is subject to gift tax once it becomes a completed gift, leaving the donor with no power to change its disposition.

The tax on gifts is computed using the unified estate and gift tax rate schedule in 26 USC § 2001.  A tax rate (40% on amounts greater than $1,000,000; lower rates on lower amounts) is applied to the taxable gifts made by the donor during the year and then subtracted from this result is any remaining gift tax exemption amount not used in previous years to offset gift tax.  This is reported on Form 709, the federal gift tax return, which is due, along with any tax due, on April 15 of the year following the gift.

B.  Exclusions

There is a marital deduction under IRC §2523 for gifts to a spouse who is a US citizen.  Different rules apply when the donee spouse is not a US citizen.

There is a deduction for qualified educational and medical expense, and certain loans of artwork. IRC §2503(b)-(c), (e), (g).

There is a deduction for charitable gifts under IRC §2522.

Read more: Gift Tax and Exclusions

Join us on facebook!

Join us on twitter!

Join us on LinkedIn!

Join us on YouTube!

View Larger Map

[Register and log in for special rewards.]

  • Asset Protection for Your Kids
  • Asset Protection for Your Kids