Gifts of Personal Property Attorney in St. Paul

Estate planning and gifting deserve a higher priority for most people who want to plan for their future. It's essential to consider estate planning well before retirement because gifting your assets can benefit you and your loved ones. It’s also important to keep in mind that gifts are subject to specific tax regulations at the federal and state level.

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If you plan on gifting assets to your family heirs or beneficiaries, you should seek expertise from an estate planning attorney. You'll be provided with an experienced, knowledgeable, and communicative attorney when you work with our firm. Call to schedule a free consultation to discuss your gifting of personal property needs.

Federal Tax Laws: An individual can give gifts worth up to $15,000 per year to as many people as they desire without a gift tax. A couple can therefore give up to $30,000 per year per recipient. Writing separate checks for each gift to stay within these limits is important because the recipient will not be required to file an IRS Form 709.

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It's essential to be mindful of the gifting limits. If you give your family member a gift worth $15,000 and then give them an additional $100 in the same year, it will exceed the annual limit, and you must file an IRS Form 709.

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As per Federal tax laws, each individual has a lifetime exclusion limit of $10 million (adjusted for inflation) for estate and gift tax. Any gift above the annual limit of $15,000 per person or $30,000 per couple will reduce the lifetime exclusion limit of $10 million (indexed for inflation).

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Gifting to your spouse does not fall under the gift tax as it is considered a marital deduction. Additionally, you can give unlimited gifts to a qualified charity without incurring gift tax. However, the giver, not the recipient, will be responsible for paying any taxes resulting from the offering.

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Minnesota Tax Laws: Minnesota does not impose a separate gift tax. However, for estates in Minnesota, there is a three-year window for review called a lookback period. Any gifts given over the annual exclusion amount recorded on IRS Form 709 within three years of your death will be added to your estate for calculating any Minnesota estate tax. 

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The lookback period will apply to the following individuals

• Minnesota residents who gift away real estate or tangible property located in Minnesota
• Residents of Minnesota who gift away real estate or tangible property located outside of Minnesota
• Non-residents who gift away real estate or tangible property located in Minnesota.
• Minnesota also has a lookback period to qualify for Medicare which is five years.

It's essential to document gifts for legal and tax purposes. A written document that confirms the gift, should include details such as the following:

• The date you gave the gift
• The item's description
• Serial or model number
• Adjusted basis 
• Fair market value

If the gifted property has a title, such as a car or real estate, transferring the title serves as proof that a gift has been made. The giver and the receiver should sign and date the document. It's also necessary to have the record notarized.

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Proper documentation is necessary when giving gifts for the following reasons:

• It helps avoid disputes with tax authorities, 
• It helps prevent the property from being included in your estate
• Removes responsibility from the giver for income tax if the recipient later sells the property. 
• It helps prevent conflicts between family members. 

It also helps to show the gift on financial statements and notify the recipient's lender. Even if an IRS Form 709 is not required, documenting the gift is still a good practice.

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A gift requires transferring complete control and ownership of the property. The gift will not be considered valid for tax purposes if you retain any control, interest, or income from the property. In other words, if you want the gift to be considered a gift for income or tax purposes, you must give up all control, interest, and income from the property.