The Wall Street Journal recently took up the praises of the annual gift exclusion in an article aptly titled "The Gift That Keeps Giving." Indeed, gifts will keep giving, and it's important to know how they work and how to make them appropriately.
Currently you can give up to your annual exclusion to as many parties as you wish each calendar year, without any corresponding reduction in your lifetime gift/estate tax exemption. The current annual gift exemption is set to $13,000 and will expand with inflation.
Don’t forget, if you are married, "gift splitting" is a way to give $26,000 to your loved ones. This is especially important in blended families when the entire $26,000 will be coming from the separate resources of one spouse to his or her own children. Note: there is some simple IRS paperwork required to make this work.
Depending on the number of family members (or other loved ones) you may have and the extend of your resources, maximizing the annual gift exclusion truly is a simple, but significant technique for wealth transfers.
Reference: The Wall Street Journal (August 17, 2012) "The Gift That Keeps Giving"
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