| May 18, 2012 | 0 Comments

We are now in the middle of a two-year window of an opportunity for you to transfer wealth to other individuals.  The three opportunities are as follows:

Annual Exclusion Gifts – You can give up to $13,000 per year to as many people as you like.  The individual does NOT have to be a family member.  If you are married you both can give up to $26,000. per year to an individual.  There is no tax reporting required and there is no lifetime limit as long as the amount per year is within these limits.  These gifts are not taxable to you OR the beneficiary.

Lifetime Exclusion Gifts – You can make gifts OVER $13,000 per person per year without paying gift tax up to a $5,000,000 lifetime limit( this amount may change in 2013).  A gift tax return is REQUIRED.  You must report the gift, but NO gift tax is owed.  This is a way to transfer assets that will appreciate in value.  All the future appreciation is removed from your estate.  The recipient takes on your cost basis and holding period for income tax purposes.

Direct Gifts (Tuition and Medical Expenses) – You can pay tuition or medical expenses for another person, without limitation.  These payments(gifts) do not count against the annual exclusion or lifetime gift exclusion.  These payments MUST be paid directly to the school or medical provider.  No tax reporting is required at this time, however, it is advised that you keep good records.  The gift of tuition means tuition ONLY.  It does NOT include books or room and boards, etc.

Please remember that these amounts are limits.  You can give UP to these levels and the amounts given in future years can vary according to your individual financial situation.  You are not locked into a specific amount or individual in the future.





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