@21norman02 wrote:
I understand it is the "7 year rule" whereby no tax is due on any gifts you give if you live for 7 years after giving them...unless it's part of a trust. At least that's what I have read.
The only 7 year rule I can find is in the UK. You are asking about the United States, aren't you?
An inheritance tax taxes the transfer of assets from the deceased to the heirs, and the heirs pay the tax. In the US, there is no federal inheritance tax.
An estate tax taxes the value of the deceased person's estate before the assets are distributed to the heirs, and the estate pays the tax. In the US, there is an $11 million exemption on the estate and gift tax. A person can give (while alive) or leave (in death) up to $11 million without paying estate tax. If the lifetime value of their gifts plus their estate is more than $11 million, they will pay estate or gift tax. Form 709 does not charge tax for gifts over $15,000, it only records them so the IRS can track the gift against the person's lifetime maximum. There is no "7 year rule" in the US. If a person gives away more than $11 million in their lifetime, they will pay gift tax immediately whenever their gifts go over the limit. For example, if you had $20 million sitting in a bank account, and you gave away $2 million per year over the next 10 years, you would pay gift tax in years 6-10, once your gifts were over the $11 million lifetime exclusion. The recipient never pays tax on a gift.
