Keeping a Gift Simple

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Estate Planning Attorney

What if you have money in a saving account at a bank and want to gift some of it to each of your children or grandchildren in an amount below the federal gift tax exemption ($14,000 in 2016)? What is the easiest way to do it? Should you issue checks in each child’s name?

From a tax perspective, it doesn’t matter how gifts are made as long as they are complete with no strings attached. Checks to adult kids are fine. If children are minors I think the easiest thing to do is create at UGMA account or a 529 education plan may be preferable. Since NJ has no gift tax, there is no reason to limit your gifts to children to the annual lifetime exclusion amount unless net worth approaches or exceeds roughly $5,000,000. However, gifts over the annual exclusion necessitate the filing a gift tax return, which is not a big deal. Many folks don’t even bother filing the return.

To discuss your NJ Estate Planning matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing consultations if you are unable to come to our office.