Can I Give My Child $13,000 without Paying Any Gift Tax?May 23, 2011 / By: Pablo Palomino, Estate Planning Attorney / Category: Gifting
If you’re like most people, you’ve heard of the annual gift tax exclusion of $13,000. This means that you can give away up to $13,000 to anyone and everyone each year and not pay gift taxes. So, the answer to the question, “Can I give my child $13,000 without paying any gift tax?” is “YES!”
However, if you can comfortably afford to give away more than $13,000, you need NOT be limited by the $13,000 annual exclusion amount.
Here are 5 ways to give away more than $13,000 to your child without paying any gift tax:
- If you are married, you and your spouse can “split gifts.” This means that your annual gift tax exclusion is doubled from $13,000 to $26,000 per recipient.
- In 2011 and 2012, you can give away up to $5,000,000 without incurring gift tax. This number is doubled to $10,000,000 if you’re married.
- You can pay unlimited medical expenses directly to the provider for anyone.
- You can pay unlimited tuition expenses directly to the provider for anyone.
- Create a grantor trust for your beneficiaries and pay the trust’s income tax.
Two important gifting rules:
- Never give away more than you can afford. Your sense of security and well-being are more important than any other goals. You must be able to sleep at night.
- If you’re going to gift significant amounts that aren’t going to be spent immediately, gift into a trust for your beneficiary, as opposed to gifting outright. Gifts in trust are protected from predators and creditors such as a divorcing spouse, malpractice suit, bankruptcy creditor, business failure creditor, and car accident or slip and fall plaintiff.
If you have questions about giving $13,000 to a child and other gifting without the wrath of the gift tax, call our office for a free, no obligation consultation. (619-696-0778)
Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.