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As 2019 concludes, it may be helpful to review rules surrounding gifting:

  • You may give up to $15,000 to any individual (i.e., donee) in 2019 and avoid any gift tax filing requirements.
  • If married, you and your spouse may transfer up to $30,000 per donee.
  • Gifts above this annual amount trigger the need to file a gift tax form with your individual tax return. Any excess gift amounts are then added to your estate for potential estate taxation.
  • If you provide a gift to your spouse who is not a U.S. citizen, the annual exclusion amount is $155,000.

Consider the following to use these rules to your advantage:

Make Periodic Gifts: Gift giving is measured per calendar year. Consider making periodic gifts annually should your planning allow.

Fund College Savings: Consider establishing a 529 college savings plan for your children and grandchildren. This type of account allows you to retain ownership of the funds while making contributions that will “gift” your children and grandchildren with a college education.

Pay Medical and Education Bills Directly: If you are concerned about exceeding annual limits for gifts, consider paying medical and educational bills for your children or grandchildren. Paying those expenses directly to the issuer is a gift alternative that removes the assets from your estate.

Donate Property: Gifts can include physical property and investments. If you’re interested in donating property, document the fair value of the property at the time of transfer. This documentation is required by the IRS.

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