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Compare Gifting and Wealth Transfer Choices

A recent New York Times article points out that with the passage of new tax laws that lifted the lifetime gift tax exemption from $1 million to $5 million, many may want to reassess how and when they transfer wealth.

Prior years, when the gift tax exemption was much lower than the estate tax exemption, it was more advantageous to gift assets after death. Now, with both estate and gift tax exemptions at $5 million per individual and $10 million for a married couple, it becomes more of a personal decision as to whether to gift now or after you’re gone.

According to the article, some of the advantages of giving gifts while you are living include:

* You can reap the appreciation of your beneficiaries and see how they are using your gift;

* If Congress decides to decrease the gift tax exemption after 2010 — and elects not to grandfather 2011 and 2012 gifts – the gifts given now would still eliminate future appreciation of those gifts from your estate.

* Those in professions with a high risk for malpractice claims can move up to $5 million into trust to protect assets.

* Same-sex and other unmarried couples can shift assets without incurring taxes.