I take this opportunity to wish all our readers a very Healthy and Happy Holiday Season and New Year! This is the season to be in a gifting mood. Of course, gifting is an important part of estate planning. I want to review some of the rules of "safe gifting."

Rule 1 - You may always gift to a charitable organization. Gifts to charity, of any amount, are a matter of the heart. For Income Tax purposes, you must take into account the type of property given, the identity of the donee (who receives your gift), the identity of the contributor (you), the amount of property given, and the place where the contribution is to be used. There are rules which limit your Income Tax deduction according to the answers given in each of these categories. For instance, contributions to a publicly supported domestic charity are more favorably treated than to either a private foundation or a foreign charity. Similarly, if you gift more than is allowable per year -an amount determined using all of the above factors, generally equal to 50% or less of your Adjusted Gross Income for Income Tax purposes - you may carry forward, and deduct appropriately, the excess for up to five years. There are also significant Estate and Gift Tax savings involved, including the possible reduction of your Estate by both the full amount of the gift and the amount of any appreciation the gift thereafter accrues prior to your death.

Rule 2 - You may always gift to your U. S. citizen spouse, in any amount, at any time. If your spouse is not a U. S. citizen there are greater restrictions on the gifting you can do (basically, only as much as $100,000, the "super annual exclusion", per calendar year).

Rule 3 - You may gift to your children and other dependents, up to $10,000 (the "annual exclusion") per calendar year, plus you may contribute directly to their actual medical or educational expenses, in any amount.

Rule 4 - You may gift to anyone else, up to the annual exclusion, per calendar year.

Gifts are a major Estate planning tool because of their potential for Income as well as Estate Tax savings and for their non-tax advantages also. Gift well!