By Miami Trust Attorneys Phillip B. Rarick, Esq. and Jay R. Beskin, Esq.
I. The Opportunity – And The Problem.
The Opportunity: Gifts to family members and others are free of the U.S. gift tax if under the exemption. Specifically, U.S. Citizens in 2012 can give away assets worth $5,120,000 ($10,240,000 per couple) without having to pay any federal estate tax or gift tax.
Note: Non-resident aliens and certain green card holders are still subject to a lifetime limit of only $60,000.
The Problem: These lifetime exemptions are scheduled to revert to $1,000,000 ($2,000,000 per couple) at the stroke of midnight on December 31, 2012. The tax rate on gifts over those amounts will also increase from the present cap of 35% to a whopping 55%.
II. Action Items
If your estate is likely to be worth more than $1,000,000 ($2,000,000 if you’re married), now is the time to act: every dollar you give away this year (while the exemption is high) is one less dollar on which your estate will pay taxes. Of course, you need to keep an ample amount of assets to provide a healthy cushion to support your life style. Therefore, assuming that you’re not likely to run out of money during your own lifetime, you can make sure your children and grandchildren don’t receive less inheritance due to hefty estate and gift taxes going to the IRS.
Other Options. Be aware there are techniques whereby you can take advantage of the $5 million gift this year such that your spouse retains the benefit of the gifted property during his or her lifetime. By doing this, your spouse retains access to the funds for his or her lifetime. For more information on this option, contact Miami estate planning attorney Jay Beskin or Phil Rarick at (305) 556-5209. Stay tuned for a future blog on this option.
As we come closer to the end of the year, more people will be scrambling to lock in these exemptions by making gifts. Based on our present volume of work, I anticipate that anyone who hasn’t made an appointment for advanced gifting by the end of September will risk not having it done by the end of this year.
Rarick, Beskin & Garcia Vega has been trusted by over 400 law firms and many families during the past 18 years for estate planning, trusts, and probate cases. To schedule an appointment, call (305) 556-5209 or email email@example.com.