Almost every week I receive an email from a tax or financial advisor about how my clients should take advantage of the current gift tax exemption. The exemption of $5.12 million allows an individual to give away just over five million dollars before paying any federal gift tax (side note: MN does not have a gift tax). Fellow estate planning attorney, Manish Bahia, has a great analysis of the gifting issue in his July newsletter. I encourage you to read it. Jamie Held has also written on the subject as it relates to Portability and you can read my article on the gift and estate tax laws for 2011-2012.
As part of the Tax Relief Act of 2010, the gift tax exemption is expected to change at the end of this year. None of the experts predict that it will increase and in fact most agree that it will be reduced substantially.
I do not recommend that clients make gifts just because of the tax laws. However, anyone who wants to give away more than his or her annual gift tax exclusion ($13K) should meet with his or her attorney and tax advisor now to discuss a gifting strategy. The urgency is to ensure that your advisors have the time to put your plan together before, as Reuters put it, the gift-tax-apalooza starts.
