Gift Tax Planning
Gift & Estate Taxes
If you give someone money or property during your life, you may be subject to federal gift tax. The money and property you own when you die (your estate) may be subject to federal estate tax. To maximize your tax savings you need a general understanding of when these taxes apply and when they do not and how much money or property you can give away during your lifetime or leave to your heirs at your death before any tax will be owed.
Generally, you do not need to file a gift tax return unless you give someone, other than your spouse, money or property worth more than the annual exclusion ($12,000 in 2007 and 2008) for that year. Although a return may be required, no actual gift tax will become payable until the cumulative lifetime taxable gifts exceed the applicable exclusion amount. The donor is primarily responsible for the payment of the Gift Tax.
Most relatively simple estates (cash, publicly traded securities, small amounts of other, easily valued assets and no special deductions or elections or jointly held property) with a total value under $2,000,000 and a date of death in 2007 or 2008 do not require the filing of an estate tax return.
