“Tis The Season To Be Gifting…”
During the holiday season many parents and grandparents traditionally are contemplating their year-end annual gift tax exclusion gifts to the kids and grandkids. Most are aware they can make tax free gifts of $13,000 per year per person ($26,000 per couple). This amount is in addition to your lifetime exemption discussed below.
This year also offers a unique opportunity to make more sizeable gifts without tax consequences, but time is of the essence. Through the end of 2012, the state and gift tax exemption is $5,120,000 per person with a top tax rate capped at 35%. Unless these generous tax provisions are extended, they will expire on December 31, 2012 when the exemption will be reduced $1,000,000 with a tax rate up to 55%!!
Does anyone have a crystal ball to see what, if anything, Congress will do? Will they extend the tax cuts or not? One way or the other, it appears unlikely that the current exemption amount will continue. Therefore, because the exemption could be substantially lower in future years, it also makes sense for even families with more modest estates to consider more aggressive gifting strategy. Remember, what we are talking about is a gifting strategy to move assets from your taxable estate through lifetime gifts without tax consequences while you are alive. Whether gifting makes sense depends on one’s circumstances or concerns. Some may not want to give up control or some may feel the kids are not responsible enough to be trusted with large gifts or have those gifts subject to their creditors or rigors of a divorce. Not to worry. Through the use of some innovative estate planning using an irrevocable trust, these concerns can be avoided.
In conclusion, now is the time to revisit your estate plan to take advantage of these gift tax planning opportunities. Now is an excellent time to transfer assets irrevocably to a trust to garner the tax, asset protection and other advantages that trusts can provide.
Happy Holiday to All and Happy Gifting!!
About the Author
Chiumento Law, PLLC is one of the oldest law firms in Flagler and Volusia counties. The well-respected law firm is a full-service firm, with attorneys providing legal services to individuals, families, and businesses in Florida in a broad range of areas. Our practice areas include Elder Law, Bankruptcy Law, Family Law, Estate Planning, Business and Corporate Law, Real Estate law, Immigration Law, Criminal Law and Construction Law. The firm has offices in Palm Coast and Ormond Beach and handles both criminal and civil cases. At Chiumento Law, PLLC, we are proud of our long-term commitment to the Flagler and Volusia County community. Our lawyers are all active community members, and many have served in multiple positions in local government and community organizations.
Please contact us at (386) 445-8900 with any questions or to schedule a consultation.