Legal Question in Tax Law in California

It is not the recipient of a gift (the donee) who pays a gift tax upon a gift being completed, it is you, the donor, who pays the tax.

There is an annual exclusion as well as a credit available for estate taxes and gift taxes that can be used to avoid having to write a check.

You should consult with an estate planning lawyer to discuss your goals. You could set up a living trust and have your love partner be the beneficiary after your death. This gives you the ability to change your mind between now and when you die.

Also, upon a change in ownership, to a love partner or to your sister, the property taxes will change to the fair market value. Transferring the house into your living trust does not result in your property changing value for property tax purposes.

You need to think this through more and get more information from an attorney about the choices and effects from a legal, accounting, and tax (estate taxes and gift taxes) standpoint.

The gift tax laws can be complex, especially in regards to non-US citizens or residents. However, generally a US citizen can give another US citizen up to $13,000, in cash or value, in 2012, without incurring any gift tax liability, or having to file a gift tax return.

Marcel Florestal,

Senior Counsel

212-918-4416-Telephone

The Wooten Legal Consulting, PC