June 2008

December 2012

Ask a trust officer:

Major year-end gifts

DEAR TRUST OFFICER: I’ve been reading all year that 2012 could be the last year for making large gifts without owing a federal gift tax. Should I make such a gift in December?—WAITED UNTIL THE BUZZER

DEAR WAITED: Estate planners have been warning their clients that this year’s $5.12 million federal lifetime gift tax exemption could fall to just $1 million next year. Most of the focus has been on the income tax rates that are slated to jump up, but equally severe changes are in store for estate and gift taxes.

Anecdotally, through last summer we heard that only a handful of affluent families seemed interested in taking advantage of this opportunity, which in some circumstances could lead to tax savings upward of $2 million. Since the November elections, however, many more have been making appointments with their estate planning advisors.

An estate planner will want to view a major intrafamily gift within the larger wealth management context of the estate plan. So, if you’ve really waited until now to get started, it may be too late. On the other hand, if you’ve made some preparations for a major transfer and were just waiting to see the resolution of the tax mess in Washington, yes, you may want to pull the trigger on that strategy.

Not many observers think that there will still be a $5.12 million gift tax exemption in 2013. The President’s compromise plan, a version of which passed the Senate last summer, calls for a $3.5 million estate tax exemption and a $1 million gift tax exemption.

See your tax and financial advisors to learn more.

Do you have a question concerning wealth management or trusts? Send your inquiry to tormey@pgbank.com.

(December 2012)