Gifting Makes Cents in 2012

Micahel L. StarkTwo-thousand and twelve is more than halfway over, but it’s not too late to take advantage of the unique estate and gift tax opportunities this year presents. Until the end of 2012, depending on your previous gifts, you may be able to gift up to $5,120,000 without incurring generation-skipping or gift taxes. Recent low property values and record low interest rates are making gifting more advantageous. You will want to set-up your gifting plan soon, because unless congress acts quickly, in 2013 the exemption is scheduled to go to back to the $1 million dollar limitation.

If you have never explored gifting as an option to reduce your estate taxes, there has never been a better time than now. You’re probably wondering what you would "gift" and who you would "gift" it too? We regularly see clients give cash, closely held stock, real estate and tangible personal property to their children and grandchildren. Not only does gifting reduce the size of a taxable estate; it also passes assets to the next generation with potential estate and income tax benefits.

Gifting a family vacation home is another great way to take advantage of the gift tax exemption. Many families plan to pass the non-income producing homes to their children someday, but there is no better time than now. Not only can you avoid incurring gift taxes but your children will receive the gift at a much lower value with many real estate markets having depressed values. If you have a child or grandchild and are looking to invest in their future, gifting to a 529 college savings plan is a great option. An exception in the gift tax law permits five years of annual exclusion gifts to be made in the first year of funding a 529 account. This means an individual can contribute up to $65,000 and a married couple can gift up to $130,000 through the annual gift tax exclusion for each child or grandchild.

By maximizing your gifting in 2012 and taking advantage of one of the highest gift tax exemptions we have ever seen, you may be removing both the properties’ present value along with potential appreciation from future income and estate tax.

To learn more contact Michael Stark or your Stark & Knoll attorney at 330-376-3300 or or via email at

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