JK Lasser's New Rules for Estate, Retirement, and Tax Planning, 6th Edition

CHAPTER 11Smart Strategies for Gifting Assets to Family Members

One of the most straightforward ways to reduce estate taxes is to give away your assets. However, many people are reluctant to do this, fearing that they might need those assets at some future date. For example, we met an elderly widow who had $11 million in mostly government bonds. Her income needs were very modest; however, she was unwilling to make any gifts for fear she might need the money for a future health reason. The best way to overcome these fears is to understand how much in assets you'll need in the future. To do this, complete the analysis in Chapter 5. Knowing that you have substantially more assets than you need for your retirement years should make you more confident about giving away assets. In this chapter, we examine the most popular strategies for gifting assets to family members.

The Annual Gift Tax Exclusion

You may think that giving away your assets shouldn't include interference from the government. After all, it is your property, and you should be able to do with it as you please. There was a time in our history when this was the case. The result was deathbed gifts of all one's property in order to avoid death (estate) taxes. After all, we as Americans are quite ingenious at learning how to avoid taxes. But newer laws have changed the nature of the game, and you must follow the new rules if you're going to successfully minimize your taxes. The rules for annual gifting are as follows: ...