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Private Investment Forum - Fall 2012

 

Gift Tax Savings Opportunities may be Coming to an End on December 31, 2012

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At the end of 2010 Congress enacted the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (“2010 Tax Law”).The 2010 Tax Law made substantial and significant changes to the Federal estate, gift and generation-skipping transfer (GST) tax system.These changes are set to expire on DECEMBER 31, 2012 unless Congress acts soon.

You now have unprecedented gift planning opportunities available to you but you must act before the end of the year in order to reap the benefits, before the expiration of the current Tax Law.

Currently, we have a $5.12 million exemption ($10.24 million for a married couple) and a Federal estate, gift and GST tax rate of 35%. Unless Congress acts, on January 1, 2013 the exemption will be reduced to $1 million and the rate will increase to 55%.

You may wish to take advantage of the higher gift exemption by making gifts before the end of 2012.Some of the many planning techniques available include:

  1. Sale of assets to Intentionally Defective Grantor Trusts (IDGTS) – appreciation on the transferred assets accrues to the benefit of your descendents without additional gift or estate tax.
  2. Spousal Limited Access Trusts (SLATS) – uses your exemptions and gives your spouse access to assets during his/her lifetime, with your children as ultimate beneficiaries.
  3. Qualified Personal Residence Trusts (QPRTS) – allows you to remain in the home for a term of years before passing the home to your children.
  4. Forgiving a loan previously made to a family member, or making outright gifts of marketable securities or cash.

These gift planning techniques also take advantage of historic low interest rates and valuations and can also utilize valuation discounts on the assets being transferred thereby leveraging the gift being made. By utilizing this expiring estate planning opportunity, your family could realize immediate tax savings, and will establish estate planning techniques that could benefit your family for generations to come.

For additional information contact:
Stephen D. Lassar – Stephen.Lassar@Marcumllp.com
Larry H. Ingber – Larry.Ingber@Marcumllp.com
Janis Cowhey McDonagh – Janiscowhey.McDonagh@Marcumllp.com
Ronald Finkelstein – Ronald.Finkelstein@Marcumllp.com
David First – David.First@Marcumllp.com
Christine Finn - Christine.Finn@Marcumllp.com

 
 
 
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