While year end estate planning tips #1 and #2 recommended considering making gifts that aren't really gifts at all before 2011 expires, tip #3 is a different animal altogether. On December 17, 2010, the Tax Relief Unemployment Insurance Reauthorization and Job Creation Act ("TRUIRJCA" or "TRA 2010" for short) was signed into law, and it made sweeping changes to the rules governing estate taxes, gift taxes and generation-skipping transfer taxes for the 2010, 2011 and 2012 tax years.
Included in these sweeping changes was the increase of the lifetime gift tax exemption from $1 million (the exemption that was in effect from 2002 through 2010) to a whopping $5 million. If you have been contemplating making use of this $4 million differential in order to reduce your estate tax bill but have not yet done so, then now is as good of a time as any to move forward. And to top it off, under the provisions of TRA 2010 the lifetime gift tax exemption will increase to $5.12 million on January 1, 2012, so this means that you can give away up to $5 million on or before December 31, 2011, and then an additional $120,000 on or after January 1, 2012.
But with all of that said, making use of the $4.12 million differential does come with some risks since TRA 2010 is set to expire on December 31, 2012, which means that the lifetime gift tax exemption will revert back to $1 million in 2013. As such, using up some or all of your lifetime gift tax exemption in order to reduce your estate tax bill should not be taken lightly and should only be done with the advice and guidance of your estate planning attorney.
Included in these sweeping changes was the increase of the lifetime gift tax exemption from $1 million (the exemption that was in effect from 2002 through 2010) to a whopping $5 million. If you have been contemplating making use of this $4 million differential in order to reduce your estate tax bill but have not yet done so, then now is as good of a time as any to move forward. And to top it off, under the provisions of TRA 2010 the lifetime gift tax exemption will increase to $5.12 million on January 1, 2012, so this means that you can give away up to $5 million on or before December 31, 2011, and then an additional $120,000 on or after January 1, 2012.
But with all of that said, making use of the $4.12 million differential does come with some risks since TRA 2010 is set to expire on December 31, 2012, which means that the lifetime gift tax exemption will revert back to $1 million in 2013. As such, using up some or all of your lifetime gift tax exemption in order to reduce your estate tax bill should not be taken lightly and should only be done with the advice and guidance of your estate planning attorney.
SHARE
