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Gifting in 2012: take advantage of favorable estate planning conditions

On Behalf of | Feb 16, 2012 | Estate Planning |

As our readers may know, big changes may be in store for estate planners and their clients in 2013, and time is running out to take advantage of favorable estate planning conditions. In fact, the current situation is the most favorable estate and gifting environment since the creation of the Internal Revenue Code. Other favorable factors include historically low interest rates and widespread undervaluation of real estate

Gifting is one area that those with large estate should really consider doing some serious estate planning, so as to take advantage of the current situation.

At present, each person has the ability to make annual tax-free gifts of $13,000 per person, per recipient, as well as unlimited direct gifts for medical and educational expenses. Also in 2012, the combined gift and estate tax exemption is at $5,120,000 per person.

Making lifetime gifts is a effective way to minimize estate taxes. There are various ways to gift one’s assets, putting them out of one’s estate, while maintaining a degree of control over them. Doing this involves the use of trusts, LLCs, asset sales, insurance policies, promissory notes and other techniques.

There are many options with respect to lifetime gifting, but it should always be borne in mind that any technique used should serve the interests of the one making such plans. Each family has a unique situation, and planning techniques should be selected within the wider context of income taxation, intergenerational matters, and portfolio management. Estate planning should always be seen in the wider context of the family it is meant to serve.

Source: Forbes, “Tax Free Gifting During 2012-A Great Deal!,” Rob Clarfeld, February 14, 2012.