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Gifts and Estate Planning

Dec 07, 2015 08:39PM ● By Danel DuRee

            Since it is December, I am going to revisit the (alleged) reason for the season: that’s right, everybody’s favorite topic, gift giving (and receiving). Although gift giving is less important in recent times than in years past (because of a larger estate tax exclusion), it can still be used as a tool in estate planning or as a tool to simply help other people.

            As I have discussed before, the 2015 federal estate tax exclusion is $5,430,000 per person, up from $5,340,000 per person last year. However, the taxable federal estate includes not only the net value of the property of the decedent; it also includes any lifetime taxable gifts made since 1977. Most of us will never need to worry about reaching that $5,000,000 plus estate bar, but politicians have been known to change their minds, and that number could very well come back down from the historically high level it is at today. For that reason, it is important to consider the types of gifts that are excluded from lifetime taxable gifts.

            The most well known exclusion is any gift to a qualified charity. A gift to a qualified charity is not taxable either while a person is living or as part of their estate if the gift is made at death through a will or a trust. Along similar public policy lines, there are also unlimited gift exclusions for any medical or educational costs paid directly by a donor.

            Another exclusion is the annual gift exclusion. In 2015, any person can give any other person $14,000 without the gift being taxable. This is the same as 2014. There is also a onetime aggregate gift exclusion amount that is equal to the estate tax exclusion of $5,430,000 in 2015. The annual exclusion also happens to be excluded from the onetime exclusion. The tax code once again amazes with its simplicity. By using an irrevocable trust, a person can also take advantage of these gift exclusions while still retaining control over the assets until a certain point in the future. By making gifts, we cannot only support causes or people in whom we believe; we can also lessen the chances of having to pay estate taxes one day. Please call my office for complimentary information about a variety of estate planning strategies.

            Best wishes for a lovely holiday season, and a happy new year!

              Daniel L. DuRee is a third generation resident of Contra Costa County and a licensed attorney practicing in Walnut Creek. He can be reached at (925) 210-1400 or visit