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§
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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.
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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§
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§
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Can I give anyone a gift of any amount?
- You can, but amounts above $17,000 per recipient per year may have tax implications!
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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!
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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.”
