The Source @ AXA Equitable

A Trio of Financial Gifts that Show Great Thoughtfulness – and May Reduce Taxes

Posted December 3rd, 2013 at 11:57 AM EDT

This time of year, many people start to wonder about two questions: what kind of gift can I give a loved one that will never wind up in a garage sale, and how can I prepare for my annual check-in with the Internal Revenue Service (IRS) on April 15, 2014?

Charitable giving could be the answer. While the most cherished gift might be one that’s hand-made, AXA Equitable has some ideas for people who can’t sew, bake holiday morsels, or write music or poetry, but still want to show extraordinary thoughtfulness and generosity (while sometimes helping to reduce taxes!).

#1 Monetary Gifts Tax-Free up to $14,000
Currently, the IRS will allow gifts up to $14,000 (or $28,000 if you give jointly with a spouse) per calendar year to as many people you have on your holiday list in cash, investments, and/or property without regard to the recipient’s age and without triggering a mandatory filing of Gift Tax Form 706.

#2 Custodial Account for a Child
This can allow you to establish a savings or investment account in a child’s name to help him or her with college costs that are already running into the five figures annually. The money also can be used for expenses such as marriage or buying a house. These gifts can be very beneficial for adults looking to minimize their estate taxes.

Your options for a custodial account include savings accounts, Series EE U.S. Savings Bonds, mutual funds, or securities, the latter including stocks, T-bills, and zero-coupon bonds. These benefits are provided under the Uniform Gift to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA). If you are considering establishing such a custodial account, please read this article on financial gifts and consider consulting with a tax advisor about your financial situation.

#3 Life Insurance Charitable Legacy Rider
If you are thinking of leaving money to charity, AXA Equitable offers clients a Charitable Legacy Rider with certain permanent life insurance policies that provide an additional 1 percent death benefit to a recognized charity of the donor’s choice. The rider, which can be attached to policies of $1 million or more, is flexible and can be changed and spread across multiple qualified charities. In addition, the rider adds no additional costs to the policy, does not increase the premium, and does not reduce cash values or cause a reduction in the death benefit. Read this article on charitable giving to learn more, and consult your financial professional.

INFOGRAPHIC: Charitable Giving around the World
Click here to download an infographic on the state of charitable giving around the world.

More information on charitable giving can be found on www.axa-equitable.com

Additional Considerations Before You Act
Some drawbacks exist to these gifting vehicles, such as reducing the amount of financial aid a student may be eligible for. In addition, once the child reaches the age of majority under state law, he or she may have access to the entire UGMA/UTMA account and may not be legally obliged to use the money for educational expenses.

If you suspect that your child or grandchild might not handle education savings responsibly and therefore hesitate to give a large gift directly to a recipient, the IRS allows you another avenue: you may pay a person’s college or other expenses, such as medical costs, on a gift-tax-exempt basis and with no dollar limits attached. Simply make out a check directly to the institution.

Another thing to keep in mind is that an adult gift recipient is fully responsible for payment of any capital gains tax on the appreciation of the gift’s value.

About AXA Equitable
In business since 1859, AXA Equitable Life Insurance Company (NY, NY) is a leading financial protection company and one of the nation’s premier providers of life insurance, annuity, and financial products and services. The company’s products and services are distributed to individuals and business owners through its retail distribution channel, AXA Advisors, LLC (member FINRA, SIPC) and to the financial services market through its wholesale distribution channel, AXA Distributors, LLC.
AXA Equitable, a subsidiary of AXA Financial Inc., is part of the global AXA Group, a worldwide leader in financial protection strategies and wealth management with 102 million clients in 57 countries as of December 31, 2012. “AXA Group” refers to AXA, a French holding company for an international group of insurance and financial services companies together with its direct and indirect consolidated subsidiaries. Find AXA Equitable on Facebook and Twitter. For more information, visit www.axa-equitable.com.

AXA Equitable and AXA Advisors do not provide tax or legal advice. Please consult with your professional tax and legal advisors regarding your particular circumstances.
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