Re: Gift taxes

From: "Cal Lester" <cal_lester@email.msn.com>
Subject: Re: Gift taxes
Date: Wed, 29 Jul 1998 17:20:44 -0400

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- -----Original Message-----
From: persfin-digest <owner-persfin-digest@lists.xmission.com>
To: persfin-digest@lists.xmission.com <persfin-digest@lists.xmission.com>
Date: Wednesday, July 29, 1998 11:55 AM
Subject: persfin-digest V5 #38

>persfin-digest        Wednesday, July 29 1998        Volume 05 : Number 038
>

>Date: Tue, 28 Jul 1998 14:09:47 EDT
>From: <Memills@aol.com>
>Subject: Gift taxes
>
>I'm reading conflicting material about gift taxes.   I read that up to
$600k may
>be gifted without taxes, then I read that only $10k per year can be gifted
without taxes (see below)
>
>I'd appreciate any clarification anyone can offer.
>Thanks,
> -- Mike Mills
>Conflicting nfo from an internet web site:
>
>The 1997 exemption of $600,000 from estate taxes and gift taxes to which
>everyone is entitled will gradually increase until it reaches $1 million in
>2006. Thus, people will be able to pass on greater amounts to their heirs
>free of either estate or gift taxes.
>
>Under current law, you may give up to $10,000 to any other person during a
>year without having to pay the gift tax
>

>>>>    Mike, what you read is basically correct. YOU are confusing GIFTING
with Federal Unified Estate/ Gift Tax. When you die, EVERY dollar that you
leave in your ESTATE is subject to the Feral Esate Tax. However there is a
Unified CREDIT of about $182,000 or so dollars, that is EQUIVILENT to the
amount of TAX that would be DUE 9 months after your Death, on an Esate of
$625,000, for 1998. If you are married, then each of you have the same
credit (total $1,250,000). Therefore, IF your ESTATE is valued at LESS than
$625,000 at your Death, then it would owe ZERO in Federal Estate Tax.

            There are two caveats that go with that:

1) you can make a GIFT to anyone in any amount up to $10,000, and NOT incur
any Gift Tax. IF you were to make a gift of MORE than $10,000 then you would
have the choice of either paying the Current Gift Tax applicable, or USING
up a portion of YOUR Unified Estate/Gift Tax EXCLUSION Credit. If you are
married, then each of you could GIFT up to $10,000 to as many people or
organizations that you wish.

2) IF you are married, you are permitted to GIFT ANY amount to your Spouse
at your Death, and No Federal Estate Tax will be due at that time. However
when the Spouse dies, the entire amount (less that Spouses excludable
amount) will be taxable.

If that is not perfectly clear, write to me.
Cal Lester CLU
Insurance Course Coordinator
Broward Community College
Cal_Lester@msn.com

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