If you want to transfer assets to your loved ones while you are still alive these transfers are potentially subject to the federal gift tax. This tax is unified with the estate tax and there is a $5.12 million unified exclusion at the time of this writing in 2012. (It is scheduled to be reduced to $1 million in 2013.)
What this means is that gifts that you give during your life using this exclusion will reduce the exclusion amount that is left when your estate is being transferred to your heirs.
There are some additional gift tax exemptions beyond the unified lifetime exclusion and some people will benefit by utilizing them. One of these allows for each taxpayer to pay the health care expenses of other people as a gift free of taxation. It should be noted that in addition to services rendered this exemption extends to the purchase of health insurance for another individual’s use.
You may also make direct payments to educational institutions to pay tuition for students as a gift. This exemption includes tuition only, not books, fees or living expenses.
In addition you can give gifts equaling as much as $13,000 per year directly to any number of gift recipients free of taxation without impacting your unified exclusion. So you could use this exemption to further assist a student.
If you are interested in learning more about the taxes you may face as you start to look forward toward the future simply take a moment to arrange for a consultation with a licensed and experienced South Carolina estate planning lawyer.