Tuesday, October 16, 2012

Is now the time to give gifts to your children or grandchildren?

Amanda Gerstnecker, Esquire
Both the federal estate tax limit and the tax imposed are set to change at the end of this year, unless Congress takes action. It is widely anticipated that beginning on January 1, 2013, the federal estate and gift tax exemption will revert back to much lower 2001 levels and that estate tax rates will significantly increase.
The 2012 estate tax and lifetime gift tax exemption are $5,120,000 per person and $10,240,000 per couple, with a maximum tax of 35%. Beginning in 2013, if Congress fails to enact further legislation, the exemptions will drop down to $1 Million per person and there will be an effective tax rate of 55%. In other words, you will be able to gift free of tax approximately $4 Million less and will be taxed 20% more.
For those of you whose estates are at or near the $1 Million mark, now is the time to give gifts to your children or grandchildren to ensure that your gifts are exempt and that you can take advantage of the lower tax rate.
Since discussing and drafting a comprehensive estate plan takes time, you should begin thinking about the gifts you would like to make and contact us to ensure that you are able to take full advantage of the current estate tax limit and rate.

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