Estate Planning: Funding a down payment for family members
Some seniors may wish to help family members with the cash needed for a down payment for a home purchase. The annual gift tax exclusion is ideal for this situation.
For the year 2013, the annual gift exclusion was raised to $14,000 per person. This means someone may gift up to $14,000 in 2013 without paying any gift tax or fulfill any special reporting requirements to the IRS. Simply put, the annual gift tax exemption is an estate planning tool you can utilize that will enable you to make estate gifts prior to death.
Using the annual gift tax exclusion, parents or grandparents are able to gift up to $14,000 per person per year. For example, two parents or grandparents could gift a total of $28,000 to a child or grandchild. This could be doubled to a maximum of $56,000 by also making gifts to the spouse or partner of the family member.
When families ask for our advice on helping with a home purchase, we always recommend gifts rather than becoming a co-borrower. After gifts are made, there are no continuing obligations. When you become a co-borrower, you are responsible for the mortgage payments for the duration of the loan term.
Those that are doing estate planning should always seek professional advice from their estate planning attorney and their tax accountant.
Chrysanthemum Show, Brookside Gardens IMG_7936
Photograph by Roy Kelley using a Canon PowerShot G11 camera.
Roy and Dolores Kelley Photographs
Comments (23)Subscribe to CommentsComment