United States: Year-End Gift And Estate Planning

Last Updated: November 10 2015
Article by Stacey Delich-Gould

Here in Rockefeller Center, holiday decorations are starting to go up, and preparations have already begun to welcome the tree – it feels as if year-end is right around the corner. Thankfully, there are two months left in 2015, but that means just two months to make important decisions about year-end estate planning. This Tax and Wealth Planning Pointer provides a quick view of the planning points to consider before you sing Auld Lang Syne.

Consider Your Year-End Gifting Plan

  • Gifts That Aren't Gifts

There are several types of payments a donor can make that will not trigger the gift tax. "Annual exclusion" gifts utilize the annual exclusion against gift tax, which for 2015 is $14,000 per recipient (this amount will remain unchanged in 2016). Thus, married couples can give $28,000 to each recipient in 2015, and the number of donees to whom you can gift is unlimited. In order to count as a 2015 gift, cash gifts must be made by 11:59 pm on December 31, 2015, and checks must be cashed before January 1, 2016. However, we strongly advise that you not wait until the last minute – if you have not already made your annual exclusion gifts, now is the time.

In addition to annual exclusion gifts, generous donors can also make unlimited payments on behalf of others directly to medical providers for qualified expenses or to educational institutions for tuition expenses without incurring a taxable gift.

  • Gifts Utilizing the Exemption Amount

In 2015, an individual can transfer up to $5.43 million without incurring any gift tax liability. This amount is often referred to as the "exemption amount," and it is indexed yearly for inflation. This is in addition to annual exclusion gifts. Upon death, the exemption amount translates into an estate tax exemption, meaning that $5.43 million (also indexed for inflation), less what has been used during the individual's lifetime by making gifts, can pass free of estate tax. (My August 2015 Pointer discusses the pros and cons of lifetime gifting utilizing the exemption amount.) If you want to consider a large gift utilizing all or a portion of your exemption amount, you should contact me or another adviser as soon as possible to discuss, so that the most effective strategy can be implemented before year-end.

If you have already utilized all of your exemption amount in prior years, remember that the exemption amount is indexed annually for inflation. The 2015 exemption amount is $90,000 more than taxpayers had in 2014 (when the exemption amount was $5.34 million). Thus, if you made irrevocable transfers to estate planning vehicles in prior years (e.g., to trusts for children), consider transferring an additional $90,000 this year ($180,000 for married couples). Any gifts utilizing your exemption amount should be reported to your accountant so that such gifts can be reported on your gift tax return.

  • Charitable Gifts

To qualify for the 2015 charitable deduction, gifts to charities must be made by December 31, 2015; checks must be sent by the 31st but need not be cashed by that date. Making gifts of appreciated securities to charity can be a tax-efficient strategy, as the donor receives a deduction for the full fair market value of the donated securities but does not recognize any gain on the appreciation.

Taxpayers who are at least age 70½ have been permitted to give up to $100,000 directly from their IRA to a public charity – this is often referred to as a "charitable IRA rollover." However, the legislation authorizing charitable IRA rollovers expired at the end of last year. Congress has yet to pass legislation extending this benefit, and there is no way to know if and when such legislation will pass.

Contributions to Retirement Plans

Consider maxing out contributions to your retirement plans. Contributions can be made on a "pre-tax" basis, which reduces your 2015 taxable income. For 2015, you can contribute up to $18,000 to a 401(k) or 403(b) plan ($24,000 if you are age 50 or older) and/or up to $5,500 to a traditional IRA ($6,500 if you are age 50 or older). Contributions to a 401(k) or 403(b) usually must be made by December 31, but transfers to traditional IRAs generally can be made until April 15 of the following year.

Stay Current with Income Tax Payments

You should review your withholding and estimated tax payments with your accountant, as underpayments of income tax can result in interest and penalties. A taxpayer must either pay 90% of his or her current year's liability (through a combination of withholding and estimated tax payments) or qualify under the "safe harbor" rule, i.e., paying in 100% of your prior year's income tax liability (or 110% if your prior year's adjusted gross income exceeded $150,000 for a married couple, or $75,000 if married filing separately).

Over the past several years, an increasing number of taxpayers have reported that their refunds are being delayed without any explanation from the IRS. Thus, while conventional wisdom has generally been that a taxpayer should keep current with his or her liability in order to avoid the assessment of interest and penalties, you should also be careful to ensure that you do not make a significant overpayment.

Review Your Current Estate Plan

  • Consider Whether Any Changes Are Necessary

From a tax and planning standpoint, there is no "magic" to reviewing your estate planning documents at year-end, but there is no time like the present to ensure that your current documents accurately reflect your wishes. Consider whether any significant life events have occurred since the documents were executed (e.g., births, deaths, marriages, divorces, etc.) that need to be reflected in revisions to your documents. If you have moved from one jurisdiction to another since the documents were drafted, it is a good idea to have your documents reviewed and updated by a practitioner in your current jurisdiction, as state and local tax laws and probate procedures vary. It is also prudent to consider whether some of your plans have changed, such as changes in guardians for minor children, changes in Trustees/Executors, or changes of outright distributions to beneficiaries to distributions in trust.

  • Contemplate New Strategies

One strategy is to create a Grantor Retained Annuity Trust (GRAT). Funding a properly structured GRAT can allow a donor/grantor to gift assets to a donee/beneficiary without using any of the donor's lifetime exemption amount and without the imposition of any gift tax.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Ostrow Reisin Berk & Abrams
Stroock & Stroock & Lavan LLP
Day Pitney LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Ostrow Reisin Berk & Abrams
Stroock & Stroock & Lavan LLP
Day Pitney LLP
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions