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Gift Inter Vivos

Candlefocus Editor
Gifts inter vivos (Latin meaning “gifts between the living”) are gifts made while the grantor, or giver, is still alive. Such gifts are sometimes referred to as outright transfers or lifetime gifts, because the transfer of property and the enjoyment of the benefit of it occurs during the donor's lifetime. The main advantage of a gift inter vivos is that it can quickly and easily transfer property from donors to beneficiaries without using the more involved process of an estate or will, and without the potential delaysrelated to probate.

Gifting is an important way of transferring wealth or property to family members or friends without being taxed. Unlike traditional inheritance, which taxes payable by the beneficiary of the estate, gifting imposes no such burden on the recipient of the gift. Therefore, it is a tax-efficient way of transferring wealth to individuals or organizations, who can then make use of it as they wish.

The most common form of gifting inter vivos is cash. Easy to give and easy to receive, cash gifts have a low enjoyment, meaning the gift does not have to be reported on tax returns until it's exceeding certain levels per year. Other popular forms of gifting include stocks, bonds, and real estate that are associated with temporary gains and capital losses.

The owner of the property transferred through a gift inter vivos will be responsible for reporting the gift on tax returns if the value of the gift exceeds certain levels per year. It’s important to remember the annual exclusion amounts for both individuals and couples, and make sure to keep proper records of the transfer to ensure that any taxes Owed on the gift are paid.

In some cases, gift inter vivos may be added to a person's lifetime exclusion limit, or the maximum amount you can give away without owing taxes. For 2020, the lifetime exclusion limit is $11.58 million, including gifts between the living. If inter vivos gifts exceed that limit, the excess amount is subject to the federal estate tax (40% in 2020).

Gifts inter vivos are an important part of estate planning and can be used to ensure that family members or friends can benefit from your wealth without being taxed. However, it’s important to understand the tax implications of gifting and make sure to keep proper records of all transfers.

Gifts inter vivos can be an effective way to transfer wealth to individuals or organizations and help them better enjoy their lives. Therefore, it’s important for any person considering gifting to consult with a qualified professional to ensure that any process is done correctly and with the right precautions.

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