If you are seeking to leverage your wealth and distribute as much as possible to your children (or grandchildren), then you may have a limited opportunity to capitalize on that desire. As you may know, when 2010 began, the cap for gift tax distribution was one million dollars ($1,000,000.00). However, near the end of 2010, the gift tax cap was raised to five million dollars ($5,000,000.00).
In 2012, Congress reaffirmed the gift tax at five million dollars ($5,000,000.00), allowing for a modest increase for inflation. Moreover, the gift tax is per person, allowing a married couple to gift slightly over ten million dollars ($10,000,000.00) through 2012. Thereby providing a window of opportunity for you to pass assets to your children and grandchildren, tax free during your lifetime.
Even more significant, the gift tax became portable between spouses. That means that the estate of a deceased spouse can transfer the unused portion of the five million dollars ($5,000,000.00) gift tax exemption to the surviving spouse.
Will this unique opportunity still be available after 2012? No one knows for sure, but considering the current state of government debt, it may not be wise to wait and find out. There would appear to be a strong possibility of going back to the one million dollar ($1,000,000.00) cap. Many estate planners are trying to anticipate what will happen depending on who wins the election in 2012. However, regardless of who wins, there will be ample pressure to work on the U.S. deficit.
The bottom line is that if you do not have a good reason for waiting to do your estate planning, then you should avoid risking that some of the benefits available today will disappear. Remember, you can always modify you estate plan in the future to take advantage of new benefits, but you cannot go back into the past to take advantage of a benefit that has been changed or revoked. If in doubt, speak with an experienced attorney and ensure you are making informed decisions about your assets and estate.
In New Jersey and Pennsylvania, please contact the Dopkin Law Firm to consult with a skilled tax lawyer by calling us at 215-519-4269. If you prefer, you can fill out our intake form and we will contact you.