Forums / Legally Speaking / LEGALLY SPEAKING

Giving the Gift of Funds

Choose the Right Option for Your Family

Parents and grandparents wishing to set aside funds for the benefit of their children and grandchildren have several options, but all of these choices include the donor permanently parting with the cash or other assets transferred.

Any gift of funds, no matter how it is structured, may be subject to gift taxes. Under current law, each donor may give each donee up to $13,000 per calendar year without incurring a gift tax and, in most cases, without filing a gift tax return to report the gift (this exclusion is sometimes called the gift tax “annual exclusion”). Using the annual exclusion, a couple could give $26,000 per year to each of their children or grandchildren. Paying a child’s or grandchild’s tuition or medical expenses, if paid directly to the provider, is not considered a gift for gift tax purposes.