How much can I give to a grandchild each year for federal gift tax purposes?

A: Each year, you're permitted under federal law to make gifts to each grandchild in an amount of $13,000.00.

Whether your gift is to a child or grandchild, if your gift is at or below this amount, no return is required.

For gifts above that amount, a gift tax return may be required but each person also has a $5,000,000.00 million dollar lifetime exemption (during 2011 and 2012) before they must begin to pay tax. 

There is also a provision that allows you to pay more for a child or grandchild's college education but
only if the payment is made directly to the college or educational institution.

Between the $5 million exemption (per donor) and the $13,000 annual exclusion, per recipient, it is possible for a married couple to move huge sums through gifting during 2011 and 2012.

Becareful, however to get advice about filing a gift tax return, and the best startegy for optimizing transfers to children or grandchildren.

David Frees, JD is Chairman of the Trust, Estate and Wealth Preservation Section of
Unruh, Turner, Burke and Frees.

For questions of more information about transfering wealth through gifting, trusts, and wills, call 610-933-8069
to reach Mr. Frees

David M. Frees is Chairman of the Trust, Estates, and Wealth Preservation section of Unruh, Turner Burke and Frees with offices serving all of South Eastern Pennsylvania including Chester County, Montgomery County, Berks and Bucks counties, Philadelphia and Lancaster counties. David Frees is rated highly by Martidale.com and has attained the highest rating by AVVO of 10 (Superb) on a scale of 1-10. David meets with many clients each week and in order to give them his full attention, he is not always available to reply immediately to cell phone or email requests.  Immediate assistance can always be reached at 610-933-8069. David M. Frees III dfrees@utbf.com 610-9338069 David Frees is a prolific author on legal topics and in addition to the articles and blogs featured on this site, please feel free to view his postings at http://www.utbf.com/trust-estate