Hi Terry, my dad is 93 in pretty good health, mom passed away 2yrs ago. They owned 4 properties, one we sold, one he gave to my sister, he lives in one and we're trying to sell another. He has a savings acct and some stocks. He needs to start gifting, which he should have down at least 5 years ago. What would you suggest he do? He has a rough draft will, not signed he thinks if he signs it he will die. Bottom line, what's the total amount per person he can gift and not be hit with taxes

Terry Says:

OK, you and he need some basic information, and you really must encourage him to get started now, while he is in good physical and mental health.

Here are some basics:  There is no Federal estate/gift tax until the combination of gifts and assets in the estate total over $5.45 million.  But some states levy separate estate taxes on an estate that is less than that amount.

Every year, your father can give away $14,000 to anyone, or everyone!  That is the limit for annual gifting that does not fall under the combined estate/gift tax.  Above that amount in one year, a form must be filed with the IRS noting the gift.  But no taxes are owed by either the giver or recipient until after his death, if the total is over the estate /gift tax limit.

BUT, you are in for huge trouble if you can’t convince y our father to create an estate plan — even if there are few assets left in his name.  Maybe it would be easier to convince him to create a Revocable Living Trust — which is even better than a will.  It specifies that he is in control while is  alive and capable.   Then it names a successor trustee to act if he cannot — even if he is alive. You need a qualified estate planning attorney to do this — it is not a do-it-yourself project!  AND the attorney must transfer title to any properties or savings accounts, investment accounts into the name of the trust.  There is no tax consequence to doing this.

Then he must create a healthcare power of attorney, and a living will (pull-the-plug) document giving his end-of -life wishes.  PLEASE tell him that YOU are superstitious and something terrible WILL HAPPEN IF HE DOES NOT DO ALL OF this!   Because it will be terrible if he has a stroke or slips into a coma without all this preparation.  You could be paying for lawyers to declare him incompetent, and lawyers to take the estate through the expensive process of probate.  It will be a total mess.  Please show him this response.

And if you don’t have an estate planning attorney go to www.NAELA.org — the National Association of Estate Planning attorneys.