Are gifts limited to $15,000 per year, per recipient before there is a federal gift tax. Not exactly. The $15,000 limit is your annual gift tax exclusion, but in addition each person who makes a gift has an $11.2 million lifetime exemption. For example, if a person made a gift of $25,000 in one year to one person, the first $15,000 would result in no federal gift tax due to the annual exclusion. The next $10,000 would be subtracted from the giver’s lifetime exemption, thereby reducing it to $10,190,000.00. As a result, the giver still could give away up to that last amount during his or her lifetime, or the exemption could be used at death. However, it is extremely important to remember that separate and apart from the gift tax issue is whether or not those non-taxable gifts will affect your ability to qualify for a nursing home if you are (1) in such a facility and (2) own assets amounting to $2,000.00. All of this should be reviewed with you by a skilled Elderlaw attorney.
-Attorney Jack N. Alpern