Lifetime Gifting In The Context Of Estate Planning

In this article, you can discover…

• The role and benefits of lifetime gifting in estate plans.
• The tax implications of lifetime gifting.
• The types of assets that can be gifted.

What Is Lifetime Gifting In The Context Of Estate Planning, And How Does It Differ From Other Gifting Strategies?

Lifetime gifting involves the transfer of assets by a donor to another person or beneficiary. These gifts can be for the benefit of family members or can go to a charity. These gifts can help reduce the value of your estate for tax purposes or can meet a family member’s urgent need (such as providing emergency funds for a grandchild’s medical bills).

Are There Any Limitations Or Restrictions On Lifetime Gifting In Monterey, California?

While California does not impose a state-level gift tax or restrict who can receive gifts, it’s important to be aware that gifts of real estate may still carry tax implications. Careful planning is essential, as other tax consequences, such as property tax reassessments or federal gift taxes, could apply when transferring real estate in California.

Are There Tax Implications For Lifetime Gifting?

At a federal level, lifetime gifts must be reported to the IRS on a Gift Tax Return, but not all gifts are subject to this tax. Exceptions include gifts received from spouses, small gifts of up to $17,000, gifts split between spouses, and gifts to charity.

Once your countable lifetime gifts exceed a certain amount, they will need to be reported. While this lifetime amount was near $13,000,000 in 2024, by 2025 the amount is expected to be slashed in half. Additionally, gifts made within three years of a death that resulted in gift taxes being paid are added back into the assets owed at death to compute Estate Tax.

Attorney Laura Davis is an accomplished estate planning lawyer serving California. For 35 years, she’s helped clients just like you better understand lifetime gifting, estate planning, and tax law, ensuring their gifting decisions are wise and secure.

Have questions, or in need of quality legal advice? Reach out to The Law Offices of Laura A. Davis at (831) 318-5593 for an initial consultation today.

What about property taxes? If the property is gifted, this can have considerable tax implications. Increases in the value of a property with “built-in” gain can be subject to income taxes. While previous laws allowed property transferred from parents to children to be excluded from property tax increases, newer laws will result in significant increases in property tax.

Sadly, this may cause many adult children who moved back in with their parents to provide care to sell their parent’s homes. If this describes your living situation with your aging parents, allow an estate planning attorney to advise you.

What Types Of Assets Can Be Gifted During One’s Lifetime In California?

Anything may be gifted except for pensions and retirement funds. If you wish to make gifts of the amount of these accounts, you will have to withdraw money from them, pay income tax on that amount, and distribute the net amount as a gift.

How Can An Experienced Estate Planning Attorney Help You Navigate Lifetime Gifting In Monterey, California?

An estate planning attorney can help you foresee possible legal and tax-related pitfalls to lifetime gifting. They can also keep you informed as to changing laws and advise you on how to plan around these changes to the law. Finally, an estate planning attorney can offer alternatives that can protect your assets and gifts from over-taxation and allow you to give more of your assets with fewer worries.

Still Have Questions? Ready To Get Started? For more information on Estate Planning In Monterey, CA, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (831) 318-5593 today.