taxes

5 myths about gift tax laws

Myth No. 3: If you don't give it, Uncle Sam gets it
Next
4 of 6
Back
text

Not necessarily, says Cabaniss.

"People used to be encouraged to gift for estate-planning reasons," she says. That's because amounts in an estate that exceeded $1 million were subject to estate tax, which often exceeded 40 percent, says Cabaniss.

The rules have changed repeatedly over the past decade. But here's how it now stands: Whatever you don't use of the $5 million lifetime gift exemption counts toward the estate tax exemption. Because the gift tax and estate tax exemptions are tied together for a total of $5 million, it's called a "unified credit."

"There are a lot of people with estates of less than $5 million, and they don't need to be encouraged to gift for estate tax (purposes)," Cabaniss says. "It puts a whole different spin on the reason for gifting."

One caveat: The new $5 million estate tax exemption and 35 percent estate tax rate are in place until the end of 2012. And no one knows what will happen after that, Cabaniss says. So whatever estate plans you make, it pays to revisit them annually.


 

 

advertisement

Show Bankrate's community sharing policy
          Connect with us
MORTGAGE HOME EQUITY AUTO CDs CREDIT CARDS
Product Rate Change Last week
30 year fixed 4.24%  0.04 4.20%
15 year fixed 3.30%  0.12 3.18%
5/1 ARM 3.42%  0.06 3.36%
 
View Rates in your area Next
Product Rate Change Last week
30K FICO-based HELOC 4.29%  0.01 4.28%
50K FICO-based HELOC 4.04%  0.01 4.03%
100K FICO-based HELOC 3.89% --0.00 3.89%
 
View Rates in your area Next
Product Rate Change Last week
60 month used car loan 2.79% --0.00 2.79%
48 month used car loan 2.98% --0.00 2.98%
60 month new car loan 3.24% --0.00 3.24%
 
View Rates in your area Next
Product Rate Change Last week
1 Year CD 0.95%  0.04 0.91%
2 Year CD 1.15%  0.04 1.11%
5 Year CD 1.75%  0.05 1.70%
 
View Rates in your area Next
Product Rate Change Last week
Balance Transfer Cards 15.77%  0.01 15.78%
Cash Back Cards 16.48% --0.00 16.48%
Low Interest Cards 10.96% --0.00 10.96%
 
Next
advertisement
DAILY TAX TIP NEWSLETTER

Get expert advice during tax season on tax preparation and tips for cutting your tax bill.

advertisement

Connect with us