Dec. 16, 2007 — As “Miracle on Main Street” reaches downtown Charlotte Amalie, it is a clear sign that the end of the year is fast approaching. December not only ushers in colorful street festivals, but more families consider making specific and generous gifts to individual family members and friends. It is in this spirit that I wish to offer several brief financial suggestions for year-end gifts to individuals.
Every person may give up to $12,000 free of gift tax to as many individuals as they wish. Because annual exclusions do not carry over into subsequent years, you will lose your annual exclusions for 2007 gifts if you do not make them before Dec. 31, 2007. An annual exclusion gift may consist of almost any asset, including stocks, bonds, real estate, cash, and partnership interests. Subject to special rules, annual exclusion gifts may also be made in trust.
Please keep the following points in mind as you make annual exclusion gifts at year-end:
– Gifts of stocks or bonds must be completed on or before Dec. 31, 2007. Initiating the gifting process is generally accomplished by a letter to the custodian of the brokerage account, but actual requirements vary by broker. If you hold share certificates, you must contact the transfer agent in time to complete the required paper work to transfer your shares prior to Dec. 31, 2007.
– If the gift is by check, the recipient (done) should cash or present the check to your bank for payment no later than Dec. 31, 2007.
– If the gift is of real property, including a partial interest in real property, you must deliver the deed to the grantee or their agent, and the deed should be filed with our Recorder of Deeds on or before Dec. 31, 2007.
– Your spouse may consent to be treated as making one-half of all your 2007 annual exclusion gifts. If your spouse consents to "gift-splitting," together you and your spouse may make annual exclusion gifts of up to $24,000 to each recipient in 2007. The decision to split gifts applies to all gifts made by both spouses in 2007. If you elect gift-splitting, you and your spouse will be required to file gift tax returns.
– You also may directly pay the tuition of any person to attend an educational institution without such payment being considered a gift. This tuition exclusion is unlimited but is available only for tuition paid directly to the educational institution. Tuition does not include books, room and board, or other living expenses of the student-recipient.
As the steel pans sound their melodic tones, the scent of guavaberry, coquito and Christmas sweetbreads fill the air, and families make their way happily through crowded stores, I am reminded that the holidays are truly about friends and family. By following any one of the suggestions above, both you and those who you share your gifts may find themselves with an altogether happier year-end celebration.
Editor's note: Carl R. Williams is an attorney with the St. Thomas firm of Tom Bolt & Associates, PC, concentrating his practice in estate planning.
