With no gift tax, property could be gifted tax-free to a child to lower tax burdens. It could then be gifted back when needed. This would suggest that the gift tax should remain, even if the estate tax is eliminated.

However, it is not that simple.

If there is no estate tax, then instead of gifting property to a family member, money could be loaned at very generous terms. The amount of the loan could then be given to the family member in an estate plan, effectively allowing the gift to be tax-free.

It is not clear what Congress will do with the gift tax at this point.

The initial plan for tax reform included repeal of the estate tax, but the gift tax drew silence.

Philip J. Kavesh
Nationally recognized attorney helping clients with customized estate planning guidance for over 40 years.
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