Large Gifts to Others
Many people choose to hand over significant assets or large cash sums prior to death. Although the threshold for paying taxes on such gifts is high ($5.43 million over a lifetime), if you give more than $14,000 per year per person (for 2015) you must file a special tax form.
Your estate planner can help you sort out the best way to distribute pre-death gifts while remaining in compliance with IRS laws. In addition, your estate attorney can help you file any past paperwork if you’ve given away more than the threshold in the past but did not file with the IRS.
In the vast majority of cases, the gift recipient will never have to pay taxes on gifts. In fact, when someone gives away more than the lifetime maximum of $5.43 million, the gift giver is responsible for taxes. (Although the IRS can then try to collect from the recipient.)
Giving away large gifts prior to your death is one way to see the joy your benefactors have from receiving your generous gifts. In addition, you remove the likelihood that the assets in your estate will be frozen in probate court or caught in lawsuit contesting your will.