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My Father-inlaw is 94 years old, he has $400,000.00, he of course has decided to give the each of his children and each of his grandchildren, $13,000.00 this year and then every year after that until the money he has set aside for inhertance. He says why wait until I die, I want to give it to you now. Can he do this? Also he wanted to give me his daughter-in-law, and my brother-in-law wife each $10,000.00 as well, can he do that or dose it have to be a blood relative.
Country/State/Province of question: California USA
Hello chillie, First, if and when gift tax is ever due, it is paid by the donor and not by the recipient of the gift. However, under current regulations, each taxpayer is allowed to give gifts in their lifetime of up to $1 million before any gift tax becomes due. This is part of what is called the Uniform Tax Credit Act. In addition to the $1 million lifetime exemption, each individual is allowed to give annual gifts of up to $13,000 to any number of individuals, and those gifts do not even apply towards the lifetime exemption, nor do they need to be reported. The gifts can be given to anyone at all. It does not have to be a relative. Gifts which exceed the annual exclusion of $13,000 must be reported by the donor by filing Form 709 with the IRS to report the value of the gift. However, no tax is actually due unless that donor has already reached his $1 million lifetime limit. The amount reported then reduces that donor's remaining lifetime balance that he may give in non-taxable gifts. If this was helpful please press the Accept button. Positive feedback is also greatly appreciated. Thank you chillie, and let me know if you have more questions. I am happy to help you with whatever I can.
Accountant
25+ years tax consulting. Specializing in returns for US citizens living abroad