Investopedia
By Julia Kagan
January 16th, 2023
An inter vivos transfer is one made during the grantor’s lifetime. Inter vivos gifts, which include property related to an estate, are not subject to probate taxes since they are not part of the donor’s estate at death.
Gifts that exceed $17,000 per year are subject to gift taxes if they are made to someone other than a spouse or a qualified charity. The actual value of the gifted property is calculated at the time of the transfer.
The person receiving the gift does not need to report the gift to the IRS or pay income tax on it, but the giver of the gift must pay gift taxes on it if it exceeds the $17,000 threshold. However, there is a lifetime exclusion for the giver before gift taxes actually kick in, adjusted annually for inflation. In 2023, you can give $12.92 million in your lifetime without incurring any gift taxes.
A gift inter vivos is a useful estate planning strategy for several reasons.
Giving a gift can help you reduce your taxable estate because it reduces your overall net worth. Additionally, if you give a gift to a charity, you can deduct the amount from your taxable income for the year. Many people give inter vivos gifts simply because they want to oversee the gift during their lifetime, unlike gifts that are bequeathed through a will or a trust.
The reporting requirements on gift giving are minimal, so if gifts are used to reduce the value of an estate, the giver’s property and affairs can retain a certain measure of confidentiality.
A gift inter vivos, a gift between the living in Latin, is the legal term that refers to a transfer or gift made during the grantor’s life. The three elements necessary for proper gift conveyance are donative intent, delivery or intended delivery, and acceptance.
Julia Kagan, Financial Journalist, New York
