Gift Tax

Gift tax is a United States federal transfer tax system covering certain transfers made during life for less than full value. The donor is generally the person responsible for the tax and reporting, not the recipient. A transfer can be a gift even when no cash changes hands, such as forgiving a loan, transferring an asset below market value, or adding another owner to property.

United States law provides an annual exclusion for qualifying present-interest gifts and a lifetime exemption that can shelter other taxable gifts before tax is payable. The amounts and rules can change. The annual exclusion does not mean every gift below that amount is free of filing requirements, because future interests, including many gifts in trust, generally do not qualify for it.

Why it matters for family offices

Gifting can transfer economic value, support family members, fund trusts, or advance succession. It also changes ownership and may affect cost basis, control, estate planning, and generation-skipping tax. Valuation is particularly important for private company interests, property, and other assets without a quoted market price.

The family office maintains a donor-by-donor history of gifts, valuations, recipients, trust contributions, and United States gift tax returns. That history matters because lifetime taxable gifts can affect later transfer-tax calculations. Legal title, bank movement, board approval, and tax reporting should tell the same story.

How it shows up in practice

Suppose a founder gives minority interests in a holding company to trusts for adult children. An independent valuation applies assumptions appropriate to the specific interests, and legal counsel completes the transfer documents. The office records the effective date, ownership percentage, value, and any retained rights, then supplies the file to the founder's US tax adviser.

The adviser determines the federal reporting, annual exclusion, lifetime exemption, and generation-skipping implications. The office does not label the transfer tax-free merely because no payment is currently due. It preserves the filed Form 709 and supporting valuation so later advisers can understand how the gift was treated and how much exemption was reported as used.