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- 1). Learn the estate tax ramifications of a gift. A gift tax prevents an individual from transferring an estate to an heir or living trust before their death, according to California Estate Planning Links. A gift tax taxes any gift you give to an individual that is above a minimum threshold set by the federal government.
- 2). Combine your largess (gifts) with your spouse's. If a donation is taken from a joint asset, such as a joint bank account, you and your spouse can combine the annual gift exclusion and file your gift-tax return together. Using the gift exclusion for 2010, you would have a combined gift exclusion of $26,000.
- 3). Download and fill out a gift-tax return, Form 709. It is only necessary to complete this form if your largess (gifts) exceeds the annual gift exclusion threshold, which applies on a per individual basis. For example, in 2010, the gift exclusion was $13,000.
- 4). Inform the person you gifted if you do not intend to pay the tax, as he may be liable for federal taxes.
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