It is year-end and taxes are on everyone’s mind. You may not be able to do much about the fiscal cliff, but you can fix your will and trust or just make a gift by year-end.
Procrastination is understandable, especially about death and taxes(you know what Thomas Jefferson said). Yet it’s still surprising most wealth people haven’t taken advantage of the incredibly favorable estate and gift tax law expiring at the end of 2012.
Congress enacted a $5 million exemption for both gift and estate taxes through 2012. It drops to only $1 million January 1, 2013. That’s a free pass to give away up to $5,000,000 without tax. If you are married, that’s up to $10,000,000 for a married couple with no tax.
Such an opportunity may never come again. Lifetime gifts of appreciating property can allow even more appreciation to escape estate tax. You can even impose conditions and controls so gifts aren’t squandered. Trusts, LLCs, and insurance (held in a trust) can increase the amount escaping tax yet allow you to retain control so beneficiaries don’t have unfettered access to the assets.
The estate tax remains a political game and the only certainty is that the rest of 2012 is a, Estate Planning bargain, and you don’t have to die to take advantage of it. Between now and December 31, 2012, every couple with $5M or more of assets should consider this before it’s too late.