My Grandfather And Cash Gifting
My grandfather was quite a guy. He'd made a fortune in real estate, and shared that money with all of us. Every year, without fail, we would all receive a five-figure check from him. He called it cash gifting, which I always thought was a term he made up. I was very surprised to find out that cash gifting was a centuries old custom, used by his family to not only share wealth, but lower the taxes on that wealth.
Cash gifting allows a person to give away their money, to whoever they want to, and if that gift is $12,000, or under, in a calendar year, the recipient doesn't have to pay taxes on it, or even report it, according to the IRS. The only catch being, that money has to be a true gift. You can't ask for, or expect anything in return. It's also a great way to make donations to your favorite charities, you receive a deduction, and they receive tax free money.
My grandfather was smart enough to know that estate taxes and legal fees would reduce the amount of his estate considerably, and he hated the idea of paying taxes on his income, and then burdening his heirs with more taxes, on that same income. Cash gifting was his solution to this problem. It would also eliminate the acrimony that he feared would accompany the distribution of his estate, after he died. He'd been married three times, so you can imagine the trouble there could have been, if he hadn't used cash gifting.
After he died, his entire, extended family was present at the reading of his will, and we were very surprised to learn, that with the exception of some furniture, and a few family heirlooms, my grandfather had already distributed his entire cash estate, to all of us, through cash gifting.
There were no estate taxes, and minimal legal fees. Knowing my grandfather as well as I did, I knew wherever he was, he was smiling, because he had found the perfect solution for sharing his good fortune with every one he cared about, giving us all a good foundation on which to build our own financial security.
I learned a lot from my grandfather. Good decision making, generosity, self-reliance, and financial responsibility, were just a few of the lessons he taught, but I always thought, and still do, that cash gifting was one of the best I ever learned.
by: John Schnieder
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