Ed, an even better change in the tax bill was made, imo.
Until this year, the gift tax rules allowed one to make individual gifts of up to $13,000 to as many people as one wished and a gift that exceeded that amount could be sheltered from the gift tax by using one's lifetime exemption of $1mm. Anything in excess of that was taxed at 45%. For the year 2010 only, the exemption remained $1mm but, the rate was lowered to 35%. I was preparing to make a taxable gift to take advantage of the lower rate, gambling that future estate tax rates would be higher, again. Now, instead, we have a new set of rules.
For the next two years, the estate exemption has been raised to $5mm (from $3.5mm) and the rate will be 35%. This exemption, now, can be applied to one's estate, to a large gift or to generation skipping transfers. Who knows what the exemptions and rates will be in 2013? In the meantime, if any of you have entertained the idea of shifting assets to your children and/or grandchildren but could not bear the thought of paying tax on it, this is a Christmas present that should be taken advantage of. And, the sooner, the better, so as to get the growth in the giftee's account. |
