Bernetich, Hatzell, & Pascu, LLC.

Gifting Techniques

Annual Gifting. You may make gifts of $13,000 per donee per calendar year (the annual gift exclusion), without any gift or estate tax consequences. If you are married, the $13,000 exemption is effectively doubled to $26,000. Certain gifts to Trusts will not qualify for the annual exclusion unless the trust is drafted with specific provisions. In addition to the $13,000 Annual Exclusion, you may also make tax-free gifts by paying tuition and medical expenses for your family members but payment must be made directly to the provider.

Lifetime Gifting. You can make gifts in amounts greater than the annual gift exclusion. The value in excess of your annual gift exclusion will consume a portion of your estate tax exemption determined at the time of the gift. Any appreciation or income on the gifted assets after the gift will be excluded from your taxable estate. Gifts can be made outright or in trust for a beneficiary.

The estate planning benefits and consequences of making gifts are different for federal estate tax purposes, New Jersey estate tax purposes, and New Jersey inheritance tax purposes. Each should be considered when determining what assets and how much should be gifted for estate planning purposes.