Three questions often arise this time of year.

Should I make gifts to my children and grandchildren? 

How much can I give without paying tax or filing a gift tax return? and

Does Pennsylvania also have a gift  tax?

This article will provide you with resources on each of these gift and gift tax questions.
By: Attorney David M. Frees III*
Law Offices in Phoenixville and West Chester, Pennsylvania

Question 1) Should You Make Gifts To Children, Grandchildren or Others?

If your estate exceeds 3.5 million dollars, and if you have enough core assets to provide for yourself and your lifestyle, then gifting could be an important strategy since your assets might end up being exposed to federal estate tax and state inheritance tax.  By making gifts, you move assets out of your estate at a lower value and both the asset value and the growth are moved to your heirs tax free.

Question 2) How Much Can I Give To My Heirs (or to others) Without Paying Tax and/or filing a gift tax return?

The federal gift tax annual exclusion, often changes because it is indexed for inflation. For 2023, the amount is $17,000.00.

Question 3)  Does Pennsylvania have a gift tax?

Pennsylvania residents do not pay a state gift tax on lifetime transfers.  However, if you live in Pennsylvania, state law will recapture and tax gifts made "in contemplation of death."  In English, that means that assets given away within one year of death are subject to the Pennsylvania Inheritance Tax.  Without getting too technical, if this ever happens in a family estate, contact a lawyer because there are exclusions and occasionally multiple exclusions that can be exempted from this tax.

Attorney David M. Frees III can be contacted at 610-933-8069.
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* Note:  In Pennsylvania, there are no state recognized specialties in law.  Lawyers may not refer to themselves as "experts"  or "specialists" in trusts, estates, wills, or other practice areas.  When we refer to ourselves as will or trust lawyers, we mean only that we limit our practice to the areas of wills, estates and related matters.

However, in the firm of Unruh, Turner, Burke and Frees, we have many lawyers that practice in many other practice sections such as Real Estate, Taxation, Creditors' Rights, Banking Law, and School and Municipal Law. 

To see a list of Unruh, Turner, Burke and Frees lawyers and Unruh, Turner, Burke and Frees practice sections click here.


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James Morgan - Puritan Financial Advisor 08/10/2010 09:16 AM
Laywers may not refer to themselves as "experts" or "specialists" in trusts, estates, wills, or other practice areas.
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