If you have a taxable estate or would simply like to see your loved ones benefit from your generosity during your lifetime, you may want to consider “giving” while you are living. A recent article in Forbes titled “Best Ways To Give Your Heirs Money While You're Alive” explored this subject.
There are tax limitations that come into play when you are making gifts. In order to avoid triggering any transfer taxes, you’ll want be aware of the limits and “safe harbors.” For example, you can gift up to $14,000 worth of assets per recipient ($28,000 for a married couple) without even having to report the gifts to the IRS. In addition, there are many ways to “leverage” your exemptions to give away more value than you might imagine.
Remember that this is a complicated area where you may want guidance from your trusted advisors. There are several layers of State and Federal estate, gift, and generation-skipping transfer taxes to take into account. And although gifts themselves are generally not income taxable, they may give rise to income or capital gains tax consequences. Giving while you are living can provide a wonderful benefit for both the givers and the receivers if you have a proper plan in place.