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Many Ways to Give It Away

With the a tax credit sheltering lifetime gifts up to $5.34 million, few people will owe gift tax, but there are ways to give to family members that don’t even require the filing of a gift tax return.

Annual exclusion gifts – You can give up to $14,000 to any number of recipients in 2014; married couples can give up to $28,000.  If you give assets that are likely to appreciate, for example dividend-producing stock, you can shift income tax and capital gains tax to family members in lower brackets. 

Medical and educational expenses – If you’ve already given up to the $14,000 limit to children or grandchildren, consider paying their school tuition or medical expenses.  A grandparent can pay college tuition of any amount and owe no gift tax.  This is an excellent opportunity to assist children who are paying tuition for their children, and grandchildren, who might otherwise have to take out loans.  The payments must be made directly to the school or health care provider.

Interest-free loans – You can make interest-free demand loans to family members, up to $10,000.  The income earned on the funds while the loans are outstanding can be shifted to those in lower tax brackets.

Accelerate charitable bequests – You can combine a gift to a family member with a gift to support us.  An adult child who provides financial assistance to an elderly parent could fund a charitable gift annuity that would make payments to the parent for life.  The child would be entitled to an income tax charitable deduction, and a portion of the payment to the parent would be tax-free.

Please contact us for more information.

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Contact the KQED Gift Planning department for more information or to notify us if we are included in your estate plan.

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