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Brennan Financial Services
14785 Preston Road, Suite 780
Dallas, TX 75254
Phone: 972-980-PLAN
Fax: 972-980-7859
info@brennanfinancialservices.com
Street Smarts
Smart Gifts
Gifting can be an important part of financial planning with consideration given to both the donor and the recipient. For 2009, the tax code allows taxpayers to gift up to $13,000 per year per recipient without taxes. And since these gifts don’t count against the lifetime gift exemption of $1 million and the estate tax exemption of $3.5 million, gifting is a smart way to enjoy sharing your estate.
The tax rules are quite clear in the area of gifting. A donor can gift to anyone, related or not, or to any institution. So what can we gift? We can gift anything that has a monetary value including cash, stocks, bonds, property, jewelry and many other items. There’s no tax reporting for these gifts if they fall within the $13,000 per year gift tax exemption.
In order to avoid improper use of the gift, a great idea for parents and grandparents is to gift funds directly to 529 college savings plans each year. Another strategy is to gift funds directly to an investment account like a UTMA for minors or an IRA for adult children. At Brennan Financial Services, we believe that getting children and grandchildren involved in investing is a wonderful legacy.
For investors who have stock with considerable capital gains, gifting that stock to your local charities can create tax savings for your estate. The gift of stock removes the taxation from your estate and eliminates the capital gain tax to the non-profit entity.
Beyond the tax savings, another benefit of the gifting process is that you will quickly ovserve how your heirs handle money. This may prompt you to make changes in your will. Make sure you know the gifting rules and share the wealth.