Donald M. Thompson - Wills, Trusts, and Estate Planning



One of the major reasons for gifts made during someone's life is tax avoidance. Gifts of $11,000 per donee per year ($22,000 if a spouse joins) are exempt from tax. The key to an effective gift is to relinquish all control over the money or property. The person giving the property away must not be able to get it back. Also you cannot make an effective gift for tax purposes by giving money to a trust for someone else if you are the trustee. The IRS says this is retaining rights in the property. You can make an effective gift in trust if someone else is the trustee. However, it is hard to get any gift tax exemption for gifts over $5000 per year per beneficiary to a trust. This is because IRS says that the exemption applies only to present gifts. IRS says a gift in trust is not a present gift because the beneficiaries don't get the principal until later. Gifts to charities are also deductible for purposes of the income, estate and gift taxes. They must be gifts to qualifying charities. Just because an organization is not-for-profit does not mean a gift to it qualifies for this tax deduction.

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Donald M. Thompson * 55 W. Monroe #3950; Chicago, IL 60603
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