The holiday season is a traditional time for giving. It is also a traditional time for doing more substantial estate planning.
- Gifts of a “present interest” of up to $14,000 are excluded and need not be reported on a gift tax return.
- Gifts are complete when the donor has parted with dominion and control over the gift. For example, if the gift is in trust and you have the power, as trustee or via a limited power of appointment, to decide who gets distributions, the gift is not complete.
- If a gift is made by check, the check must clear before the end of the year. Thus, if it is close, cash should be withdrawn and delivered before the end of the year.
- A gift to charity must be made by year-end in order to qualify for a deduction for that year.
- A gift to charity of over $250 must have a contemporaneous written acknowledgement from the charity. A cancelled check or other bank receipt alone is not sufficient. See IRS Publication 1771 for more information.
It may not be too late to do more sophisticated planning in 2014, such as gifts to an irrevocable trust or other more advanced planning, such as QPRTs, GRATs, etc. But, time is running out as there are only two weeks left in 2014!
Stephen C. Hartnett, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (800) 846-1555