Legal Question in Elder Law in Pennsylvania

Re: Maximum gift

Without knowledge of the specifics of your and your mother's financial situation, it is impossible to comment on all the ramifications of property transfers. There are many areas of law which interact in their effect on estate planning for elders, including income, gift and estate tax laws, the regulatory schemes which impact upon incapacity planning, such as medicare and medicaid, the property requirments for entry into continuing care contracts, etc. Mistakes can have very serious ramifications. Therefore you should seek independent advice and consult with an estate planning professional.

The discussion below relates only to the general question of gift taxes and may not apply to your situation. Please do not rely upon it. For information for the impact of transfers upon incapacity planning and medicaid, please consult a professional.

Two taxes directly effect any substantial gift -income tax and gift tax. Generally, property you receive as a gift, bequest, or inheritance is not included in your income. However, if property you receive this way later produces income such as interest, dividends, or rentals, that income is taxable to you.

Gift tax is a tax upon the giver. (In certain instances it may be paid by the person receiving the gift. Consult a tax professional for your specific situation) It is intended to tax property transferred outside the estate, so that the gifting process may not be used extensively to avoid estate tax. It is payable at the time of the estate tax payment when the amount given in excess of the allowable exemption is deducted from the estate tax exemption. Currently, the annual allowable gift exemption amount is $11,000.00 to each donee. There is also a cumulative lifetime exemption.

Ilene Young, Esq/ Law Offices of Carol E. Cardonick, PC 215-444-0445

As you are not a client of our firm, discussion of the above topic is provided for informational purposes only and does not constitute legal advice. Applicability of the legal principles discussed in this response may differ substantially in individual situations, different counties, or in different states. If you have a specific concern or legal problem, do not rely on these materials. Be sure to seek the advice of an attorney about your particular situation and facts.