How to Start a Gifting Program
Gifting cash or assets to the party of your choice is a fairly easy proposition. A proper gifting program can reduce your taxable estate without reducing your unified credit.
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Instructions
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Start your gifting program by choosing the parties you wish to gift to. Children, parents, grandchildren or other relatives are prime targets. Friends can serve this purpose as well.
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Open an account in the name of each party you wish to gift to. If the beneficiaries are minors, you will need to open an UGMA or UTMA account in each of their names. Or you can set up a trust listing them (or any other party) as beneficiaries. Trusts can allow you to gift cash or assets under more complex conditions than retail financial accounts.
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Start transferring your cash or assets after the accounts are open. If you are gifting tangible property that doesn't go in an account, it may be wise to have it appraised so that you know the exact value of your gift.
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Be sure to keep the value of your gift below $12,000 per year per person if you are seeking to reduce your taxable estate without reducing your unified credit. 529 Plans are excellent gifting vehicles, since they allow you to gift five years' worth of $12,000 gifts in one year. Therefore you could gift up to $60,000 to a single child in one year.
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Submit form 706 if you make a gift that exceeds the tax-free limit in a single year. For example, if you gift $20,000 of assets to a single person, you must report $8,000 of the gift on this form.
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Tips & Warnings
This article is intended to be purely educational in nature and should not be construed as tax or legal advice. For more information, consult your financial or estate planning adviser.
