How to Give Tax Free Property to Grown-Up Children

As your wealth accumulates and you begin to plan for later years, the specter of estate tax may rise up to haunt you. To sidestep its ominous effects, give money to your children before you die. Making gifts to minors involves creating a trust, a legal structure to contain the gifts, but for kids who are 18 or older, the process is easier and more direct.

Step 1

Check in with a tax and/or estate lawyer. Estate tax avoidance strategy is best pursued on the advice of professionals. Ideally, you and your advisor will put together a timeline of cash and property gifts that will winnow the size of your estate, directing it toward your family and frustrating the estate tax collector.

Step 2

Give $13,000 per year to your adult children. If you're married, according to Nolo.com, each parent can give $13,000 per year, for a total of $26,000 per child, without incurring any tax liability. The $13,000 can be in the form of cash or property, such as real estate or stock.

Step 3

Time your gifts to coincide with the tax year delimiter. For example, if you and your spouse elect to give a total of $50,000 to your 28-year-old child, consider writing a check for $25,000 near the end of one calendar year and another $25,000 at the start of the following year. If you give the $50,000 in a single tax year, you will be liable for gift tax on $24,000.

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