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Gift Tax

Gift Tax Exemptions

  • Gifts below the exclusion allowance for any calendar year ($13,000 as of 2009).
  • Gifts made to pay for tuition or medical expenses
  • Gifts to a spouse
  • Gifts to a political organization
  • Gifts to a qualified charitable organization.

Source: Internal Revenue Service

In general, a gift tax is owed whenever an asset transfer occurs in which the donor does not receive a comparable return of assets in exchange. In estate planning, problems often arise when a person preparing an estate decides to begin giving assets away in an attempt to avoid estate taxes after death. Unfortunately, such sudden charity can leave an estate open to taxes it cannot pay. Conversely, the proper planning of an estate using planned giving -- either to friends, relatives or qualified charitable organizations -- can be an excellent way to minimize taxation and help ensure that the value of your estate is maximized for the financial well-being of friends and loved ones.

At Howard Law, our comprehensive approach to estate planning can help clients prepare for the proper administration of their estate, minimize estate and gift taxes, and help secure your estate for the benefit of your intended beneficiaries. Our estate planning attorneys represent clients throughout the Los Angeles area, including Santa Ana, Riverside and Anaheim

By utilizing a Living Trust or other estate-planning tools, many obstacles to planning for the final administration of your estate can be handled while you are live, thus minimizing the chances that taxation issues will devalue or eliminate your state upon death. For example, determining "Fair Market Value" is often an area in which problems can arise involving the gift tax in cases where real estate exchanges hands for less than the proper valuation of a property. In other cases, the liquidation of a gift can have unintended tax consequences for the beneficiary; taxes must be paid on proceeds based on the fair market value of a gift.

Having a qualified Los Angeles estate planning attorney assist in preparing your estate for distribution can be critical to protecting your estate and ensuring tax complications do not devastate loved ones counting upon your assets for their future financial well-being.

With proper planning, significant portions or an estate can be given away tax free. For example, the 2009 per-person exemption of $13,000 would allow you to make donations to children, grand-children and other heirs tax free. If both you and your spouse made 5 donations, $130,000 could be distributed tax free. Over 10 years, $1.3 million could be distributed from your estate tax free, in time for you to see the benefits your estate is making in the lives of family members and loved ones. The same amount subjected to the historic rates of estate tax would have incurred more than $500,000 in taxes.

At Howard Law, we advise anyone considering their estate plans to do so with the qualified advise of an estate planning professional. Few mistakes can be as costly as those involving the Internal Revenue Service. If you are considering making estates gifts during your lifetime, or need to prepare for the proper administration of your estate, contact us for a confidential consultation.

CALIFORNIA ESTATE TAX PLANNING - Call (800) 872-5925 - Howard Law