Slide 1 of 8
6 Year-End Gifting Rules Every Investor Needs to Know

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.

Even if the donor has no intention of revoking (taking back) the gift, simply retaining the ability to revoke the gift through the end of the year could shift the completion of the gift into the next calendar year.

Under the Internal Revenue Code, individuals may give up to $13,000 to an unlimited number of non-charitable beneficiaries in each calendar year. Married couples may double-up and make combined gifts of up to $26,000 to children, grandchildren, or other non-charitable beneficiaries.

Here are six rules investors need to consider before making any year-end gifts.