After the death of an estate owner, the estate is taxed whenever the property is transferred. In order to limit estate taxes, the individual can give gifts prior to death. There are several things you should know regarding how gifts are taxed according to estate tax law.
Gifts Within Three Years of Death
Gifts are included when calculating taxes if given within three years of death. This property, however, must be property that the person would have put into the estate. If a gift was given in a three-year time span that would have been exempt from the usual estate tax because it’s not greater than the usual exclusion limit, that means the gift won’t be part of the estate taxes.
There are Exceptions
The three-year rule does not apply if there is a revocable trust. This type of trust is one that’s created while an individual is still alive. The individual that created a revocable trust is required to pay taxes on items in the trust if that person controls it while still living.
Consult an Estate Planning Attorney
It’s important to consult with a lawyer when planning how your assets will be handled after you’re gone. An attorney can decide which type of trust is the best for you and your family. You may need a Palm Springs estate planning attorney to answer your questions concerning gifts and estate law. Consult the law firm to have all your questions answered.