Three tax traps for generous grandparents

Between a sputtering economy and the approaching holiday season, your clients have plenty of opportunities to dote on their grandchildren. There are, however, some pitfalls to philanthropy. Here are some of the main culprits, and ways to avoid them, courtesy of the New York Times:

Cash gifts — The annual exclusion for gift tax exemptions this year is $13,000, unchanged from last year. If grandchildren are minors, their gifts may go into custodial accounts until they come of age, but your clients should resist the temptation to name themselves as custodians; if they do, the funds could be considered part of their estates.