Estate Planning & Gift Tax Planning
One of the most common misunderstandings in Estate Planning is the Estate tax, the annual and lifetime gift tax exclusions. Our experienced Estate Planning and Gift Tax Planning attorneys at the Dobson Law Group provide integrated estate planning strategies in Greenville and throughout South Carolina. We work with both clients who have an existing estate plan and with clients who require the development of a comprehensive estate plan and we utilize within the framework when applicable the strategy of the gift tax exemption and lifetime gift exclusion to reduce your estate tax burden.
Our Estate Planning attorney at the Dobson Law Group can provide you with the necessary information, benefits and possible problems with all your estate planning options while addressing the best solution for your gifting strategy. We also consider government-funded programs with asset and income eligibility requirements and the transfer of assets such as Medicaid Benefits.
Gift Tax
The gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether the donor intends the transfer to be a gift or not.
The gift tax applies to the transfer by gift of any property. You make a gift if you give property (including money), or the use of or income from property, without expecting to receive something of at least equal value in return. If you sell something at less than its full value or if you make an interest-free or reduced-interest loan, you may be making a gift. (source: IRS)
Tax-Exempt Gifts
Among others, the following types of gifts are exempt from the federal gift tax so you can make unlimited gifts in these categories without any gift tax or estate tax consequences and without having to file gift tax returns:
- Gifts to IRS-approved charities
- Gifts to your spouse (assuming he or she is a U.S. citizen)
- Gifts covering another person’s medical expenses, as long as you make the payments directly to medical service providers
- Gifts covering another person’s tuition expenses, as long as you make payments directly to the educational institution. (Payments for room and board, books, and supplies don’t qualify for this exception, but you can cover those costs by making a direct gift to the student under the annual exclusion.)
(source: IRS)
Annual Gift Tax Exclusion
The annual exclusion applies to gifts to each donee. In other words, if you give each of your children $11,000 in 2002-2005, $12,000 in 2006-2008, $13,000 in 2009-2012 and $14,000 on or after January 1, 2013, the annual exclusion applies to each gift. The annual exclusion for 2014, – 2017 is $14,000. In 2018, the annual exclusion is $15,000.
You and your spouse are each entitled to the annual exclusion amount on the gift. Together, you can give $22,000 to each donee (2002-2005) or $24,000 (2006-2008), $26,000 (2009-2012) and $28,000 on or after January 1, 2013 (including 2014, 2015, 2016 and 2017). In 2018, the total for you and your spouse is $30,000.
Lifetime Gift Tax Exclusion and Federal Estate Tax Exemption
For amounts given in excess of the annual exclusion amount, every individual has a lifetime gift tax exclusion amount, against which the excess gifts are credited. The lifetime gift tax exemption is the total amount that can be given away by an individual over their lifetime to any number of people free from taxes. However, the cumulative total of the amounts gifted in excess of the annual exclusion will reduce the amount that can be given away at death exempt from federal estate taxes.
For 2018, the estate and gift tax exemption are $5.6 million per individual, up from $5.49 million in 2017. An individual can leave $5.6 million to heirs and pay no federal estate or gift tax. A married couple will be able to leave $11.2 million to heirs exempt from federal estate and gift taxes.
South Carolina currently has no gift tax.
529 Plan Contributions
Contributions made to a 529 college savings plan are considered gifts to a future student. The special rule allows you to make a lump-sum contribution and spread it over five years for gift tax purposes. Example: You and your spouse can contribute $75,000 each or $150,000 total in 2018 to “quick-fund” a 529 college savings account for your child. The gift would be spread out over a five-year period 2018-2022 without incurring any gift tax and without reducing your $5.6 million ($11.2 million combined) lifetime gift tax exemption or your $5.6 million ($11.2 million combined) estate tax exemption.
Estate Planning and Gifting Strategies
We incorporate various gifting strategies and techniques including:
- Gifting to individuals
- Gifting to family members
- Gifting to trusts
- Charitable gifts
- Section 529 gifting
- Family limited partnerships
- Intentionally defective grantor trusts (IDGTs)
- Transfer of a home title or deed
- Transfer of automobiles, antiques and other property
- Transfer of income-producing assets to family members in lower tax bracket
Consult a South Carolina Estate & Gift Tax Planning Attorney in Greenville
If you have questions about Estate Planning, Gifting and Gift Tax planning, we can help. We encourage you to contact an experienced Gift Tax Planning lawyer at the Dobson Law Group to discuss your options and requirements at (864)271-8171 or online to schedule an initial consultation.
The Dobson Law Group provides Estate Planning & Gift Tax Planning attorney legal services to clients in Greenville County and throughout South Carolina including Abbeville, Anderson, Cherokee, Greenwood, Laurens, Lexington, Newberry, Oconee, Pickens, Richland, Spartanburg, and Union County. We are licensed in South Carolina, North Carolina, Florida, and Georgia.