This Week's Topic: EXEMPT GIFTS

We have discussed from time to time that utilizing the $11,000.00 annual exclusion should be used liberally by wealthy clients to reduce their estates for federal estate tax purposes. No reporting to the IRS by either the donor or donee is necessary. A husband and wife can give up to $22,000.00 per year to their children or other donees and still keep their lifetime exemption intact. And we have in the past discussed how you can maximize those annual gifts by obtaining valuation adjustments for gifts of minority interests in entities such as Family Limited Partnerships or even tenancy in common interests in real estate.

There are, however, some types of transfers that exempts all of some types of gifts from the federal gift tax:

All gifts of tuition payments to an educational institution on behalf of a student and all gifts of medical expenses paid to doctor/hospital/other providers on behalf of a patient.

Also, a