Double check that with your accountant or your eldercare attorney. As I understand it, the limit is $11,000/year--but that may be per person. It may be that each of you can give him $11,000--totalling the $22,000 you want to give him. You definitely want to get the answers before you do this, and from a legitimate source--please don't rely on advice you get from strangers on the internet (including me--LOL!)

Be sure, though, that you get this all set up properly, because it's not just the IRS you need worry about. If you don't handle your finances properly, and you have a health issue in future that would necessitate using certain government programs, you can be in a pickle if you've done the wrong thing. Just let an experienced eldercare lawyer set things up for you and you'll be okay.

Know you didn't ask this, but I'm really concerned that you're handing over this kind of money to your son. Why does he need this kind of $$$$? do you have other children? If so, are you giving them an equal amount? If you have other children, you need to be fair and at the very least put an equal amount in a dedicated bank account for them that will be separate from your estate. It's grossly unfair to give to one child and not the others. What if you or your husband become ill in future and you need that money for your care (I have no idea how much you have saved up, nor what your insurance situation is, but one moderately serious illness can run into the millions these days). Are you really in such good shape that you can afford to be giving away this kind of money?

And I'm the sort who always worries about the recipient--getting a chunk of money like that can be really bad for a lot of people--it often encourages them to go out and spend unwisely. On the other hand, if you're giving this money to bail them out of a bad financial situation, you then have to consider that you're enabling them to continue to make poor money choices, rather than learning to fix what's wrong and go from there. If that were the case, are you in a position to continue these gifts (and larger ones) year after year? My SIL was one who always needed money from her parents--they never turned her down. Then, after FIL died and MIL was incapable, SIL stole over a quarter of a million $$$ that was earmarked for my MIL's necessary healthcare. Why? Because her parents always let her believe she was entitled to their money by giving her everything she wanted, even after she was married. It's just a bad situation to put a child in--giving them big globs of money.

It's certainly your choice, and I've already said I don't know all the particulars here. All I'm saying is that I hope you a) discuss this with your accountant and lawyer and b) hold off for at least a month or 2 before making the transfer to really think this through and make sure it's the best for all concerned.

Here is Pub 950 from the IRS website. It says the annual exclusion from gift tax is $11,000 per person giving/per person receiving (this is from 2004, I think the amount this year is $12,000, but if you go with 11K you'll be alright). So you can give your son $11,000 and your DH can give him $9,000.

Here is a link that might be useful: IRS Pub 950

I believe that giving 22k is very safe - so long as you are not doing so in order to reduce your estate before turning to welfare or medicaid or to reduce your estate tax. As I recall - and I agree with the poster above that you have to check this for yourself - The government can look back 3 years to see if there have been any gifts that could be interpreted as a fraud on the government.

Actually a probate attorney told me that you can gift more than 22k. You can give 11k each to your son and daughter-in-law and so can your husband. If you are in a community property state, you can also give 11k to your son and daughter-in-law as a common entity as well as making the individual gifts. Your state may have some rules in addition to the federal rules. If you see an attorney and are well prepared with your questions, you should only need to buy about a half hour of attorney time. See a specialist. It's worth the extra money. Otherwise you will just have to pay for the attorney's research time. This question is simple enough, it should just roll off the attorney's tongue.

You guys are quick ! Thanks for the answers and getting them to me so quickly. That is what I thought but I am glad you reassured me. Azaalea, I am well aware of all of what you said. I didn't ask if you thought it was a good idea....Just about the mechanics of it.

The $11,000 per person includes birthday, Christmas, etc. gifts.

Good point to be reminded of, Kris

The actual amount for 2006 is 12,000 per person.

There is some misinformation above. I am a certified financial planner in training, and have finished my coursework recently, so this is all fresh.

1. You can give a total of $12K each in 2006 to your son, his wife, each of his children, without paying gift tax on it. This is called the "annual exclusion." It is excluded from gift tax and from generation-skipping tax. (You can give $12K to anyone you like under the annual exclusion rules.)

2. If you are married, your spouse can also give $12K to the above. In many marriages, one spouse really does the giving out of her/his account, and the other spouse agrees to "gift-split" the amount (allowing the doubling.) If you do this, you MUST file a gift tax return, I think it's Form 709, it may be 706. You also must gift split for all gifts in that year. (Don't you love the IRS rules?)

3. You can also give UNLIMITED amounts on behalf of an individual's education/medical care to an education facility or medical facility as long as it is paid DIRECTLY by you to the institution (you can't make a check to your son which he then pays to a hospital).

Best!

mar_cia. You're cool on gifting the $20K to your son. You take $10K out of your checking account, your husband takes $10K out of his checking account. You don't have to file any extra tax forms.

Dunno about other states, but if you live in NJ and die, they have a 3 year "look back" and will consider all gifts part of your estate and tax you accordingly.

If you're trying to do this to get yourselves eligible for Medicade or other gov benefits, and they catch you.. you're up the creek.

If you're just doing this out of the kindness of your heart, God bless you, and I'm sure your son thanks you.

Oops,,, forgot to add that if you give more than the legal 'gifting' amount in any year, YOU will have to pay the taxes on it. Just give any extra in the form of Ben Franklins and you're good to go. But, also be aware that each you and your hubby can gift to your son, his wife, and any kids they may have. You can make them *really* happy campers if you so choose to.

Gina in FL wrote: Dunno about other states, but if you live in NJ and die, they have a 3 year "look back" and will consider all gifts part of your estate and tax you accordingly.
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My MIL is in NJ and gifted each of her kids 10K for 2006. She plans to do the same every year as she was left extremely wealthy after FIL died and has a huge tax burden.

Are you saying if she does this three years in a row, the estate will have to pay taxes on the gifts if she dies in NJ? She did tell me that NJ is notorious for getting more than their fair share of the estate pie. I'm wondering if she's not aware of the look back taxation.

I have other questions, but so not to hijack, I started a thread about being the recipient of such gifts.

Yep, and i answered the other thread before I saw this one.

mar_cia.. email me at clamshell hotmail.com me and my cousin really have in depth dealings with NJ BS. My CPA even took additional workshops on trusts.... specifically for NJ.

They will add back to her estate anything that was "gifted" in last three years.,, kids won't have to worry. Estate will take the hit.

But then again,,, anyone in will will have to wait till NJ decides taxes have been paid. OOPS,,, can't tell that till estate has been distributed. NJ SUCKS

gina - we're finding out that NJ sucks with what MIL has gone through dealing with FIL's estate.

Funny you mention that NJ waits for taxes to be paid. MIL just got notification that the taxes from FIL's estate were paid. Everything was in order with his estate, her lawyer liked to lollygag around to create additional fees, but it took almost a year.

Thanks for the info about the look back. Perhaps that is why she is relocating to another state in the next few months.

PA also has the 3 year rule, I would think most states do. If I buy property for $1 from my father and he dies or goes into a nursing home before the 3 year deadline, it reverts back to his estate and either goes to the nursing home or into his estate to be taxed when inherited. It is to keep people from avoiding taxes or claiming poverty in the case of long term care by giving away their assets.

Thanks again everyone. I am in my early 50s and plan to be around for a long while. It has nothing to do with liquidating my estate so I can get welfare/medicaide. You can still discuss among yourselves though, if you like!!

my sister was suppose to take our moms $30,000. and put it in mine, hers and our other sisters nqame equally, well instead she put the money in her own kids name, can our mom get it back?

romigirl - you'd likely get more comprehensive responses if you started a new thread rather than tacking onto one that is almost three years old.

Your mom should have taken the responsibility to distribute the 30k as she wanted (and may have originally intended) and not relied on your sister to "do the right thing".

"If you have other children, you need to be fair and at the very least put an equal amount in a dedicated bank account for them that will be separate from your estate. It's grossly unfair to give to one child and not the others."

Says you. Many others, including myself, disagree with this position. Why should my parents not help a sibling of mine, if they choose to do so, without having to set aside money for me? They owe me nothing.

I should have looked at the date--sorry.