(Money Magazine) -- Q: A variable annuity that I've owned for many years has risen a great deal in value. Can I gift it to my kids? -- Anthony Cupo, Fayetteville, Ind.
A: You can, and you won't owe gift taxes as long as the annuity's current market value doesn't put you over your lifetime gift-tax exclusion (currently $5 million).
But another tax trap can make this strategy unappealing, says University of Southern California tax law professor Edward McCaffery.
When you make a gift of a variable annuity, you'll owe income taxes on your entire investment gain.
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|30 yr fixed||4.32%||4.26%|
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