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Avoiding estate tax by giving multiple gifts

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Avoiding estate tax by giving multiple gifts

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3

From my understanding in the US, a father can give an individual gift of $15,000 to a child (or anyone) without any tax liabilities and without impacting the lifetime allowance. If the father wants to give more money, can he make a gift to a third party he trusts (e.g., his brother/uncle of his son) who then makes a gift to the child, or is that tax fraud?

united-states gift-tax estate-planning

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asked 1 hour ago

StrongBadStrongBad

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3

From my understanding in the US, a father can give an individual gift of $15,000 to a child (or anyone) without any tax liabilities and without impacting the lifetime allowance. If the father wants to give more money, can he make a gift to a third party he trusts (e.g., his brother/uncle of his son) who then makes a gift to the child, or is that tax fraud?

united-states gift-tax estate-planning

share|improve this question

asked 1 hour ago

StrongBadStrongBad

700516

add a comment | 

From my understanding in the US, a father can give an individual gift of $15,000 to a child (or anyone) without any tax liabilities and without impacting the lifetime allowance. If the father wants to give more money, can he make a gift to a third party he trusts (e.g., his brother/uncle of his son) who then makes a gift to the child, or is that tax fraud?

united-states gift-tax estate-planning

share|improve this question

asked 1 hour ago

StrongBadStrongBad

700516

share|improve this question

asked 1 hour ago

StrongBadStrongBad

700516

share|improve this question

asked 1 hour ago

StrongBadStrongBad

700516

asked 1 hour ago

StrongBadStrongBad

700516

asked 1 hour ago

StrongBadStrongBad

700516

1 Answer
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7

If you give a gift with stings attached, then it isn't a gift. Thus it would be viewed as trying to get around the tax law. The law regarding this is the Step Transaction Doctrine.

But a spouse can also give a gift, and you can give a gift to your child's spouse. Thus a couple can give another couple 4x the limit each year.

If the child is in school then the giver can pay tuition directly and not worry about the limit. They can't send it to the student, they have to send it to the school.

Of course exceeding the limit in a year, does require paperwork, but the lifetime allowance is $11.4M as of 2019. Current tax law has this number adjust for inflation. If this is is something to worry about, consult a tax attorney to see how to do this legally.

share|improve this answer

edited 44 mins ago

JoeTaxpayer♦

146k23236473

answered 1 hour ago

mhoran_psprepmhoran_psprep

69.3k896174

• 
  
  
  

  
  1
  

  
  
  
  
  
  

  
  
  Nice. The first sentence is key to so many gift questions...
  
  – TTT
  1 hour ago
  

  
  
  
  


• 
  
  
  

  
  1
  

  
  
  
  
  
  

  
  
  There were a couple things I'd have posted, but 2 minor points don't make a full answer. If my edits are unwelcome, you can roll back. I won't take offense.
  
  – JoeTaxpayer♦
  43 mins ago
  

  
  
  
  


• 
  
  
  

  
  1
  

  
  
  
  
  
  

  
  
  @JoeTaxpayer the step transaction stuff is perfect.
  
  – StrongBad
  19 mins ago
  

  
  
  
  

add a comment | 

protected by JoeTaxpayer♦ 9 mins ago

Thank you for your interest in this question.
Because it has attracted low-quality or spam answers that had to be removed, posting an answer now requires 10 reputation on this site (the association bonus does not count).



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7

If you give a gift with stings attached, then it isn't a gift. Thus it would be viewed as trying to get around the tax law. The law regarding this is the Step Transaction Doctrine.

But a spouse can also give a gift, and you can give a gift to your child's spouse. Thus a couple can give another couple 4x the limit each year.

If the child is in school then the giver can pay tuition directly and not worry about the limit. They can't send it to the student, they have to send it to the school.

Of course exceeding the limit in a year, does require paperwork, but the lifetime allowance is $11.4M as of 2019. Current tax law has this number adjust for inflation. If this is is something to worry about, consult a tax attorney to see how to do this legally.

share|improve this answer

edited 44 mins ago

JoeTaxpayer♦

146k23236473

answered 1 hour ago

mhoran_psprepmhoran_psprep

69.3k896174

• 
  
  
  

  
  1
  

  
  
  
  
  
  

  
  
  Nice. The first sentence is key to so many gift questions...
  
  – TTT
  1 hour ago
  

  
  
  
  


• 
  
  
  

  
  1
  

  
  
  
  
  
  

  
  
  There were a couple things I'd have posted, but 2 minor points don't make a full answer. If my edits are unwelcome, you can roll back. I won't take offense.
  
  – JoeTaxpayer♦
  43 mins ago
  

  
  
  
  


• 
  
  
  

  
  1
  

  
  
  
  
  
  

  
  
  @JoeTaxpayer the step transaction stuff is perfect.
  
  – StrongBad
  19 mins ago
  

  
  
  
  

add a comment | 

7

If you give a gift with stings attached, then it isn't a gift. Thus it would be viewed as trying to get around the tax law. The law regarding this is the Step Transaction Doctrine.

But a spouse can also give a gift, and you can give a gift to your child's spouse. Thus a couple can give another couple 4x the limit each year.

If the child is in school then the giver can pay tuition directly and not worry about the limit. They can't send it to the student, they have to send it to the school.

Of course exceeding the limit in a year, does require paperwork, but the lifetime allowance is $11.4M as of 2019. Current tax law has this number adjust for inflation. If this is is something to worry about, consult a tax attorney to see how to do this legally.

share|improve this answer

edited 44 mins ago

JoeTaxpayer♦

146k23236473

answered 1 hour ago

mhoran_psprepmhoran_psprep

69.3k896174

• 
  
  
  

  
  1
  

  
  
  
  
  
  

  
  
  Nice. The first sentence is key to so many gift questions...
  
  – TTT
  1 hour ago
  

  
  
  
  


• 
  
  
  

  
  1
  

  
  
  
  
  
  

  
  
  There were a couple things I'd have posted, but 2 minor points don't make a full answer. If my edits are unwelcome, you can roll back. I won't take offense.
  
  – JoeTaxpayer♦
  43 mins ago
  

  
  
  
  


• 
  
  
  

  
  1
  

  
  
  
  
  
  

  
  
  @JoeTaxpayer the step transaction stuff is perfect.
  
  – StrongBad
  19 mins ago
  

  
  
  
  

add a comment | 

If you give a gift with stings attached, then it isn't a gift. Thus it would be viewed as trying to get around the tax law. The law regarding this is the Step Transaction Doctrine.

But a spouse can also give a gift, and you can give a gift to your child's spouse. Thus a couple can give another couple 4x the limit each year.

If the child is in school then the giver can pay tuition directly and not worry about the limit. They can't send it to the student, they have to send it to the school.

Of course exceeding the limit in a year, does require paperwork, but the lifetime allowance is $11.4M as of 2019. Current tax law has this number adjust for inflation. If this is is something to worry about, consult a tax attorney to see how to do this legally.

share|improve this answer

edited 44 mins ago

JoeTaxpayer♦

146k23236473

answered 1 hour ago

mhoran_psprepmhoran_psprep

69.3k896174

share|improve this answer

edited 44 mins ago

JoeTaxpayer♦

146k23236473

answered 1 hour ago

mhoran_psprepmhoran_psprep

69.3k896174

edited 44 mins ago

JoeTaxpayer♦

146k23236473

edited 44 mins ago

JoeTaxpayer♦

146k23236473

answered 1 hour ago

mhoran_psprepmhoran_psprep

69.3k896174

answered 1 hour ago

mhoran_psprepmhoran_psprep

69.3k896174