<p>Dstark…the best timing to give $35,000 is in two payments…one at the end of December, and one in January. The December gift can be $14,000 from each of you (make sure to do the checks separately as mentioned above) for a total of $28,000. Give the remaining $7000 as a New Years present…it will be counted for the following year.</p>
<p>
</p>
<p>When you do this do you have to include any appreciation or interest in the amount? </p>
<p>I dont want to file forms. :)</p>
<p>Goodness gracious, are you couples all planning on gifting more than $10.7 million per child? Or do you think your gifts won’t be grandfathered in if the amount goes down (it went up this year, not down, just saying).</p>
<p>^:)^ </p>
<p>
I’ve never personally gifted an appreciated asset, so I don’t know the details, but my understanding is that the amount is based on the basis, and the recipient would be responsible for paying the capital gains tax when they sell the asset. Not sure what you mean about “interest in the amount”.</p>
<p>@dstark - if you don’t want to file forms (or create loan documents and promissory notes for a loan), you will have to split it up into two donations across two calendar years.</p>
<p>It’s not $10.7 million per child, it’s just $10.7 million in total. </p>
<p>The total estate of husband and wife would be exempt from estate tax if it does not exceed $10.7 million.</p>
<p>I assume that is what you actually meant and just mistyped.</p>
<p>@notrichenough - I believe that the five year rule for gifts just applies to contributions to 529 plans.</p>
<p>
Back when the estate tax exemption was only $1 million, you could often put a significant dent in estate tax by a regular program of gifting to your heirs. It’s not that hard to reach $1 mil in assets these days.</p>
<p>With the current limit of $5+ million per spouse, using gifting to reduce estate tax is much less relevant. At $10.7 mill per couple, only a very tiny number of people will be hit by estate tax.</p>
<p>
Ah, cr**, I think you are right. A little knowledge is dangerous. 
</p>
<p>This is a good time to remind people that advice you get on the internet is worth exactly what you paid for it. Consult your tax person and do your own research.</p>
<p>
</p>
<p>I meant the possible appreciation and interest income over the 5 years. If it is not included and if there’s a good chance it will appreciate in the future, everyone woul gift 5x14,000 every five years rather than 14,000 annually.</p>
<p>^ As @dadinator pointed out, the 5-year thing is only for contributions to 529 plans.</p>
<p>I’m just going to set up a Walton grantor retained annuity trust to handle my estate issues. </p>
<p>:) </p>
<p>
</p>
<p>I see it now. I didn’t turn the page when I wrote that.</p>
<p>
</p>
<p>I wasn’t referring to estate taxes, but rather to gift taxes. Everyone seemed to be jumping through hoops to skirt gift tax issues. IRL, for most if us, we should be so lucky that it’s a problem. </p>
<p>My brother bid for our room on Priceline or Hotwire. It was in 2010, so we could see his S graduate. The Hyatt was years before that, I used AAA tourbook and booked directly with the hotel. Got federal government or AAA rate. We were shocked how low the rate was. The government travel office was surprised too and said they couldn’t get anything near the price we paid. </p>
<p>A little confused by what you mean.</p>
<p>If you exceed the $14,000 a year exclusion for gifts, you are then using part of your $5.34 million estate tax exemption (unless you actually want to pay gift taxes that year).</p>
<p>The two taxes and the exemptions are connected. </p>
<p>A married couple could give away $10.7 million this year with no tax consequences, but then when they decease everything in their estate would be subject to estate taxes.</p>
<p>There is no separate exemption of $5.34 million for gifts - just one total exemption for gifts (exceeding the $14,000 a year annual exclusion) and estates of $5.34 million…</p>
<p>I don’t understand what you meant when you talked about gifting $10.7 million a child.</p>
<p>If you are helping to pay for a wedding, why not pay the vendor directly instead of gifting them money? </p>
<p>
</p>
<p>Added for clarification. This stuff is confusing, but obviously doesn’t apply to most of us. But it would apply to a lot more if the exemption had reverted to the $1mm amount back in 2013 </p>
<p>“Added for clarification. This stuff is confusing, but obviously doesn’t apply to most of us. But it would apply to a lot more if the exemption had reverted to the $1mm amount back in 2013”</p>
<p>But if would apply to many people whose states have estate taxes at a much lower level. I’m assuming that the gift tax exemption applies to state, as well as federal, but I’m really not sure. Though I’m also not sure how they could track it, one way or another. And I’m not sure how the federal govt tracks it, except hoping that people are honest (and knowledgeable). Seems like they have their hands full as it is, and after you die, how many people have even thought of giving that information to their trustees? </p>
<p>@dadinator, I guess I got that wrong; thank you for your clarification. Unless I get hit by a truck some time before next Tuesday, I’m expecting that we will not hit the $10.7M limit. </p>