[QUOTE=Cemetery Savior]
[li]Giving the money to kids, grandkids, etc: There’s a $12k annual cap on non-taxable gifting.[/li]
-Cem
[/QUOTE]
Not really. As I posted on 8/27 here :"
No. In some rare cases (very large gifts), a gift can sometime be taxable to the person who gives it (the giftER) as a sort of advance Estate Tax. Altough a Gift Tax return has to be filed at a fairly low threshold.
*wiki: There are two levels of exemption from the gift tax. First, transfers of up to (as of 2006) $12,000 per person per year are not subject to the tax. An individual can make gifts up to this amount to as many people as they wish each year, and a married couple can make gifts up to twice that amount, without incurring any gift tax. Second, there is a credit that essentially negates the tax on gifts until a total of $1,000,000 has been given by one person to another (or, as the IRS puts it, “the unified credit against taxable gifts [is] $345,800 (exempting $1 million from tax)”.[2]
If an individual or couple makes gifts of more than the limit, gift tax is incurred. The individual or couple has the option of paying the gift taxes that year, or to use some of the “unified credit” that would otherwise reduce the estate tax. In some situations it may be advisable to pay the tax in advance to reduce the size of the estate.
But in many instances, an estate planning strategy is to give the maximum amount possible to as many people as possible to reduce the size of the estate (the effectiveness of this strategy is based on how long it can continue as obviously it cannot continue past death).
Furthermore, transfers (whether by bequest, gift, or inheritance) in excess of $1 million may be subject to a generation-skipping transfer tax if certain other criteria are met.
The United States has a Unified estate and gift tax.*"
I add my voice to the many suggesting a lawyer or at least a Certified Estate Planner. Your bank can suggest one, perhaps.