Gift giving in Florida and throughout the country is an act of good will and generosity that can also serve as an integral part of a strategically-engineered estate plan. The timely transfer of the ownership of money, real estate or other assets may protect the giver from federal gift tax during their lifetime and the recipient from federal estate tax after the giver's death.

An individual may choose to distribute assets through inheritance. However, many people want to witness the transfer of the gifts they give and divest some or all assets during their lifetime. Early gift-giving allows a giver to be present for the asset transfer and reduces the size of a taxable estate.

An asset passed from an individual in life or after their death to another person may be subject to both federal estate and gift taxes. Estate tax experts say that the tax owed on a gift or an estate depends upon what the gift is, the value of the asset, how it is transferred and when the gift is given.


The gift tax originated about 70 years ago as a congressional supplement to estate taxes. The idea was to keep large estate owners from giving away everything they owned to avoid a so-called death tax. In the mid-1970s, Congress linked the taxes together and applied a tax rate up to 35 percent, based on a gift's value.

Present federal law allows one person to give an annual gift of $13,000 to a close relative without paying gift tax. The gift may be cash or something other than cash like stocks, personal property or real estate.

The tax exemption applies to gifts given to a spouse, child, stepchild, brother or sister and son or daughter-in-law. One relative or any number of qualified family members each may receive up to $13,000 a year without the gift-giver being penalized.

The federal rule allows married couples to double the value of gifts they give away, since the exemption is per-person, not per-couple.

Inter vivos gift-giving, dispersing assets during a lifetime, is most helpful to individuals whose estates will go above federal limits for gift and estate tax exemptions. Experts are invaluable when gift-giving and long-range plans, like later-in-life medical care, conflict.

While gift and inheritance taxes may not be completely avoidable, an experienced estate or tax attorney can help shrink them to manageable sizes for gift givers and their intended recipients.

Source: The Tennessean, "Merry Christmas from your favorite uncle," Jody Barrett, Dec. 13, 2011