Annual Exclusion. There was and still is an “annual gift tax exclusion” amount. The inflation-adjusted annual gift exclusion amount currently is $13,000 per donee. That is, you can give $13,000 to any one person per year without (a) the necessity of filing a federal gift tax return and (b) using part of the applicable exclusion amount for federal estate tax. Married couples, of course, could and still can combine their gifts to make it $26,000 to each donee.
Gifts in 2010. The gift tax is computed with a rate schedule that has a top rate of 35 percent and an applicable exclusion amount of $1,000,000 for gifts in 2010.
Gifts after 2010. The gift tax is computed with a rate schedule that has a top rate of 35 percent and an applicable exclusion amount of $5,000,000. The gift tax is reunified with the estate tax. This means there is no more of the weird disconnect between the $1,000,000 gift tax exclusion and the $2,000,000 or $3,5000,000 top estate tax exclusion.
Gifts before 2010. The gift tax top rate had been falling from a high of 55 percent in 2001 to 45% from 2007 to 2009. This tax was on amounts in excess of the maximum exclusion amount, which has been parked at $1,000,000 since 2002.
Can a parent gift the 13,000 to as many people as they what?
We are thinking son, spouse, and 3 grandkids.
Yes, each person may give a gift of $13,000 to as many other people as he or she wishes without the necessity of filing a federal gift tax return.
What if my father gives a gift of 10,000 to three children. And then applies for Title 19 within say six mos. Will the children have to give that money to the state?
Probably not, but the rules for Title 19 may disqualify your father from benefits. One has to be careful to thoroughly understand the Title 19 rules for the state in which your father will make application for benefits.