We would like to pass along a reminder about the pending changes to the unified gift/estate tax parameters. A very limited window of opportunity still remains and it is something that you should be aware of if you are serious about wealth preservation.
Nonexempt gifts that you give while you are still alive that exceed the lifetime exclusion amount are taxable. This exclusion sits at $5.12 million for the rest of 2012, but it is going down to $1 million next year.
Simply put, you could divest yourself of resources equaling $5.12 million this year without incurring any gift tax liability.
It is important to understand the wide definition of a taxable gift. There are certain trusts that people establish for the benefit of their loved ones. If they are are irrevocable and you are surrendering incidents of ownership the act of funding the trust is generally going to be considered an instance of taxable gift giving.
Gifts of shares in a family limited partnership are also considered to be taxable.
So, the ideal is to fund these vehicles with assets that are exempt from the gift tax.
Given the fact that the exclusion will $5.12 million for the rest of this year right now may be the ideal time to take action.
This is a very viable opportunity and it is something that you should take into consideration if you have assets in the seven figures. The intelligent course of action would be to sit down and discuss your situation with an estate planning attorney who has a thorough understanding of estate tax efficiency strategies.