Parents make numerous gifts to their children throughout their lives. These gifts may be anything from cash to assistance with education, music lessons, a down payment on a home, a first car or various other ways in which parents assist their children. Often, as parents become grandparents whose own children are established, these gifts are now made to the grandchildren. These gifts are given in love, but can cause tax problems if not done correctly.
Every year you can gift up to $13,000, tax free, to each child or grandchild. They also have a lifetime gift tax exemption. As an example, if your child need help to purchase a home, you could gift them more than the $13,000 but you would have to file a gift tax return and it would count against your lifetime exemption. In 2012 each person has a gift tax exemption of $5,120,000. On January 1st, however, that drops to $1,000,000.
Quite simply, there has never been a better time to make a gift. Not only can you gift to your children, but you can also reduce the size of your estate and thereby minimize the amount that would be exposed to estate taxes at your death. When added together, this can make an incredible difference in the amount that you can pass on to your loved ones without signing over your assets to Uncle Sam.
If you would like more specific information on the gift tax exemption and the tax law changes scheduled for January 1st, 2013, contact us today at 888.222.1328.
Contributed by MH Arrowhead and Phoenix Estate Planning Attorney West Hunsaker
About Morris Hall:
At Morris Hall, we have focused our legal practice on estate planning for over 40 years. Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, power of attorneys, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects. We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, ensuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Cave Creek, Tucson, Prescott, Flagstaff and Arrowhead. Contact us today at 888.222.1328 to schedule an appointment!
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.