As noted earlier, the Stevens family is generous with both their time and money. They make donations to three favorite charitable organizations (local art museum, local public radio station, and local homeless shelter) and are generous members of their church. Their will leaves a total of $4.5 million to charitable institutions at their deaths.
Neither John nor Mary has made any substantial cash gifts to their children or any other family members. No gifts have been made under the Uniform Gifts/Transfers to Minors Act. They do, however, plan to leave each child something at their death. The parents' wills name their children, Johnny and Lynn, as secondary beneficiaries, assuring that property will go to them at the surviving spouse's death.
Comments
Clearly, a discussion of starting up an annual transfer of assets to the children, taking advantage of the annual gift tax exclusion amount ($13,000 in 2010), should be presented here. At issue is whether or not the couple has a reason for not transferring assets to the children before their own deaths. If no reason is cited, they might appreciate knowing that they may, jointly, give up to $26,000 to Johnny and Lynn — decreasing their estate by $52,000 per year with no gift tax consequences. They could include the grandchild and give away a total of $78,000 per year gift tax-free. (Contributing the grandchild's money into a Section 529 college savings plan or other qualified education arrangement on the grandchild's behalf could produce tax savings down the road, too.)
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