Making a Gift and Keeping it Too
Postponed income tax rate increases and deduction limits, a moratorium on phase-outs of exemptions, lower estate and gift tax rates coupled with higher exemption levels and other changes are acting as catalysts for prudent planning between now and the end of 2012.
The dust is slowly settling after the enactment of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (the 2010 Tax Act). Estate planners are beginning to carefully consider a number of opportunities that allow clients to take maximum advantage of current conditions. Postponed income tax rate increases and deduction limits, a moratorium on phase-outs of exemptions, lower estate and gift tax rates coupled with higher exemption levels and other changes are acting as catalysts for prudent planning between now and the end of 2012. The philanthropic area, for example, has seen strong interest in the use of lead trusts and other plans that leverage new lifetime exemption increases during the rather limited time period when they're a certainty (see the article I wrote for the March 2011 issue of Trusts & Estates,“Increased Exemption Amounts Create New Opportunities,” p. 14.) Since the beginning of the year, increasing numbers of charitably minded individuals have reportedly begun funding relatively low payout lead trusts for shorter periods than in the past, making significant charitable gifts before passing underlying assets to their heirs on a tax-favored basis. To continue reading this story, click here.
