By: David M. Frees III Review David Frees’ AVVO Lawyer Rating.
It is that time of year when we start to get questions about gift taxes, the gift tax exemption, and about how much you can give to your children and grandchildren.
This year we are getting a new question for the first time, “I thought that the amount goes up every year so how much can I give this year?”
Well, the reason many people believe the amount of the gift tax exemption (the amount that you can give without paying gift tax or filing a gift tax return) goes up every year is that it is indexed for inflation and has gone from the original amount of $10,000.00 to $11,000.00 and recently, to $13,000.00.
However, the amount does not go up every year. And, because the rate of inflation is so low (or perhaps non existent), the amount will remain the same for 2009 and 2010 unless Congress acts to change it as part of the review of the estate and gift tax that is still pending in Congress.
Quick Facts and Reminders about Gift Taxes:
Each person can give up to $13,000.00 for 2009.
A married couple can give $26,000.00 to each recipient even when one spouse has the assets and the other does not. (This is called a split gift and may require your spouse to sig the gift tax return)
If your child or grand child is married, you can also make a gift to the spouse. However, that gift is not protected in the event of a divorce.
You can make gifts of property, real estate, Limited partnership interests, stock or cash. However, the recipient acquires your basis in the asset and may have to pay capital gains taxes on the gift if the specific property is later sold for more than your basis.
We also have a related article on our Estate Planning Blog on Three Gift Tax Questions
Please leave your questions and comments below.
* Note: In Pennsylvania, there are no legal specialties. Lawyers may not refer to themselves as “experts” or “specialists” in trusts, estates, wills, or other practice areas. Therefore, when we make reference to ourselves as will or trust lawyers, we mean only that we focus our practice to the areas of wills, estates and related matters.