Definition
A gift inter vivos, translated from Latin as “gift between the living,” refers to a transfer of property made by a donor (grantor) to a recipient (donee) during the donor’s lifetime. Unlike bequests in a will, which are distributed after the grantor’s death and subject to probate, inter vivos gifts are not part of the donor’s estate at death and therefore avoid probate taxes.
Key Points
- Gifts inter vivos are subject to annual exclusion limits (e.g., $17,000 in 2023).
- The giver, not the receiver, is responsible for paying any applicable gift taxes if they exceed the exclusion limit.
- The total value of all gifts given during one’s lifetime counts against their lifetime exclusion limit (which is significantly higher at approximately $12.92 million in 2023).
| Gift Inter Vivos | Bequest (Gift at Death) |
|---|---|
| Transferred during the lifetime of the giver | Transferred after the giver’s death |
| Not subject to probate | Often subject to probate taxes |
| Annual exclusion limits apply ($17,000) | Subject to estate taxes |
| Generally, no reporting needed by receiver | Inventory and tax reporting required |
Examples
-
Example of a Gift Inter Vivos: Bob gives his granddaughter a car worth $20,000. Since this exceeds the annual exclusion limit of $17,000, Bob may need to report the excess $3,000 as a taxable gift.
-
Example of a Bequest: Mary leaves her home valued at $400,000 to her son in her will. This becomes part of her estate and may be subject to estate taxes upon her passing.
Related Terms
- Gift Tax: A federal tax applied to an individual giving money or property to another individual.
- Lifetime Exclusion: The total amount that can be given as gifts without incurring gift tax; in 2023, this limit is $12.92 million.
Visual Representation
graph LR
A[Gift Inter Vivos] --> B{Tax Implications}
B --> C[Not Subject to Probate]
B --> D[Gift Taxes Applicable After $17,000]
A --> E[Lifetime Exclusion $12.92 Million]
Humorous Quotes and Fun Facts
- “Why do we always give gifts inter vivos? Because it’s way harder to give gift inter mortuos!” 😉
- Fun Fact: If all the gifts inter vivos were wrapped with a nice bow, we might finally see the IRS as the Santa Claus of tax enforcement!
Frequently Asked Questions
-
Can I give anyone a gift of any amount?
- You can, but amounts above $17,000 per recipient per year may have tax implications!
-
Do I need to report gifts received?
- Nope! The receiver of the gift does not report it for taxes. It’s the giver who may have to!
-
What happens if I give more than the exclusion limit?
- You may need to file a gift tax return, but don’t panic! You can use your lifetime exclusion limit.
Resources for Further Study
- IRS Gift Tax Information
- Books: “Structure and Practice in the Law of Inter Vivos Gifts” and “Estate Planning Simplified.”
Test Your Knowledge: The Gift Inter Vivos Quiz
## What does "inter vivos" mean?
- [ ] Between the dead
- [x] Between the living
- [ ] After death
- [ ] Without gifts
> **Explanation:** "Inter vivos" literally means "between the living," representing gifts given during someone's lifetime.
## If you give a friend a gift worth $25,000, how much gift tax might you owe?
- [x] You may need to report $8,000
- [ ] No tax because it’s under the limit
- [ ] You owe no tax if you plan to give it to a cat
- [ ] You immediately pay $25,000 in taxes
> **Explanation:** $25,000 - $17,000 = $8,000 may need to be reported for gift tax.
## When are gifts inter vivos reported on taxes?
- [ ] The receiver must report them
- [ ] Only if they become alive
- [x] The giver must report them if they exceed the limit
- [ ] They aren't reported at all
> **Explanation:** The giver is responsible for reporting gifts exceeding $17,000 annually.
## What is the annual exclusion limit for gifts in 2023?
- [x] $17,000
- [ ] $12,000
- [ ] $20,000
- [ ] $25,000
> **Explanation:** The annual exclusion limit for gifts in 2023 is $17,000.
## Do inter vivos gifts count against the lifetime exclusion limit?
- [x] Yes
- [ ] No
- [ ] Only if they’re food
- [ ] Only if the gift is from a stranger
> **Explanation:** Yes, total gifts given during one's life, including inter vivos gifts, do count against the lifetime limit.
## Can married couples combine their exclusions?
- [x] Yes, they can give $34,000 together
- [ ] No, they must stick to their individual limits
- [ ] It depends if they are BFFs
- [ ] Only when they want to
> **Explanation:** Yes, married couples can combine their annual exclusion limits to double the giving power!
## What type of tax applies to gifts over $17,000?
- [x] Gift Tax
- [ ] Estate Tax
- [ ] Sales Tax
- [ ] Fun Tax
> **Explanation:** Any amount over the annual exclusion limit may incur gift tax.
## Is it possible to donate as many gifts as desired without limitation?
- [x] No limits unless they exceed annual exclusions
- [ ] Yes, unlimited gift giving!
- [ ] Only if you have a big hug
- [ ] Gifts are like donuts – endless!
> **Explanation:** While you can give lots of gifts, any value over $17,000 may need to be reported.
## Must receivers pay taxes on received inter vivos gifts?
- [ ] Yes, they get taxed heavily
- [x] No, they do not
- [ ] Only if they forget to say thank you
- [ ] It depends on the weather
> **Explanation:** The recipients do not have to pay taxes on inter vivos gifts.
## What if the giver dies shortly after gifting?
- [ ] The gift is automatically returned
- [x] The gift remains with the recipient, avoiding probate
- [ ] The IRS seizes it
- [ ] The gift makes the headlines
> **Explanation:** Once gifted, it generally does not return to the estate and bypasses probate.
