Winning (and Losing) Gifting Strategies

Posted on March 27th, 2014 at 3:38 PM

By: Robert L. Moshman, Esq.

Cue the ball to drop on Times Square, prepare to bid adieu to 2012 and its ironically short-lived “lifetime” gift tax exclusion of
$5.12 million, and let’s have a chorus of “Auld Lang Syne,” lest our old acquaintance, the $1 million gift tax exclusion, be forgot.

Oh, how we would like to forget the $1 million exclusion from 2001 that was evicted from our Tax Code ages ago, yet, like an
unwanted houseguest who has been blindfolded, driven 1,000 miles away, spun around three times but somehow finds his
way back, the $1 million exclusion now comes a’knockin’ on the door for 2013.

Is it possible to exploit the $5.12 million gift tax exclusion in the waning days of 2012 and not lose control of one’s wealth? Which techniques work and which may backfire? And what techniques apply if you miss the deadline?

Gifting Under Pressure

If you’ve been living under a rock and recently emerged with only a few days left in 2012, then the news that the opportunity will soon expire to transfer $5.12 million without gift tax consequences may pressure you to make a prompt decision.

Of course, if you have less than $1 million in total assets and haven’t already utilized your lifetime gift tax exclusion, then you can still make gifts next year, if you are so inclined, because even the potentially reduced gift tax exclusion for 2013 will still cover the entire estate.

If your net worth is very high and you’ve been on the verge of making an outright gift of $5.12 million to someone in early 2013 based on personal non-tax-related reasons, then, no pressure. You can accelerate your timing, make that gift in 2012, and make good use of the available exclusion. But for those people with some wealth and no definitive gifting plan in place, the decision is decidedly more complex and has a number of relevant variables...

Read the full PDF here.

Related Attorneys: James J. Eccleston

Tags: Robert L. Moshman, Moshman, Estate Analyst

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