End-Of-Year Estate Planning

As we march quickly through the last quarter of 2008, consider

the following for this year and for 2009.

2008 Annual Exclusion Gifts - $12,000

In 2008, you may give up to $12,000 to any person without

incurring gift tax and without using any of your $1 million gift

tax exclusion. If you are married, your spouse also may give

$12,000 to the same beneficiary or beneficiaries. Moreover, with

some exceptions, annual exclusion gifts need not be reported on a

federal gift tax return. A $24,000 annual exclusion gift to a

beneficiary on behalf of both spouses but made from one

spouse's individual funds (rather than $12,000 from

each spouse) is called a "Split Gift." Split Gifts must

be reported on a federal gift tax return even though they qualify

for the annual exclusion.

Gifts to minors should be made to trusts for their benefit, to

Uniform Transfers to Minors Accounts, or to education accounts such

as the so-called "529 Accounts" (which grow income-tax

free). You may apply five (5) years of your annual exclusion for

gifts in one year to a 529 Account ($60,000 to each child's

account), provided you have not used up your annual exclusions for

this year on prior gifts to the child. Gifts to 529 Accounts in

excess of the annual exclusion (e.g. $60,000) must be reported on a

federal gift tax return even though the gift qualifies for the

annual exclusion from gift tax under the special rules for 529

Accounts.

When determining how much annual exclusion you have available to

give to a beneficiary, (i) be sure to count the

beneficiary's share of insurance premiums contributed by you to

any Insurance Trust; but (ii) don't count any gifts for

education tuition or medical expenses that you paid directly to a

school or medical provider. Gifts made directly for tuition and

medical care are not taxable, they are not counted toward your

annual exclusion, and they do not reduce your $1 million gift

exclusion.

2008 Kiddie Tax Rules

Beginning in 2008, the kiddie tax applies to: (1) children under

18; (2) 18-year old children with unearned income in excess of the

threshold amount, who do not file a joint return and who have

earned income that does not exceed one-half of the child's

support amount; and (3) children between the ages of 19 and 23 if,

in addition to the above rules, they are full-time students. For

2008, the kiddie tax threshold amount is $1,800.

2008 And 2009 Charitable Donations From IRAs

If you are have reached age 70 ½, you may deduct

donations...