The principle behind the annual gift tax exclusion is to shelter gifts commonly made on birthdays, holidays, weddings and other special occasions. However, many high-net-worth individuals may also utilize the annual gift tax exclusion as a strategy to mitigate the impact of future estate taxes.
According to Richard Behrendt, director of estate planning for Baird’s Private Wealth Management group, the timing of making year-end gifts is important because a transfer of property is treated as a completed gift for federal gift tax purposes only after the donor has unconditionally relinquished all dominion and control over the transferred property.
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