Financial & Estate Planning

In 2008, you can give away up to $12,000 worth of assets to any number of people without owing gift tax. For married couples, this annual gift tax exclusion is $24,000 per recipient. If you have estate tax concerns, it may make sense to give away assets that have declined in value, such as stocks and real estate, before year-end.

Suppose, for example, Ann White owns thousands of shares of XYZ Co. stock, which have fallen from $100 to $50 per share. In 2008, Ann can give 240 shares to her son Harry, 240 shares to her daughter Nan, and 240 shares to each of her four grandchildren. Each gift will be valued at $12,000 (240 shares time $50) so they will each be covered by the annual exclusion and no gift tax will be owed.

In 2009, the annual gift tax exclusion will increase to $13,000 per recipient per year. Therefore, Ann will be able to give away many shares of XYZ by year-end 2008, tax-free, and make still more tax-free gifts early next year. If XYZ shares move back up eventually, that appreciation will be out of Ann