A very rare window of opportunity is closing, and it’s closing very quickly. Currently, the federal gift tax exemption allows you to gift up to $5 million ($10 million for married couples) without incurring a gift tax. This applies if you actually gift your assets now, and it applies equally if you die in 2012 (i.e. there won’t be federal estate taxes on estates that are less than $5 million for individuals and $10 million for couples).
Unless you plan on dying in 2012, you need to take some action to make sure that you get the maximum benefit from the current gift tax exclusion. This applies to everyone who has more than $1 million in net worth. It is VERY LIKELY that the exclusion will revert to $1 million on January 1, 2013. So if you haven’t taken action by then, the opportunity will likely have forever disappeared. That means that if you die after 2012 with more than $1 million in net worth, the excess will be taxed to your heirs at a very high rate. In some cases, the highest tax rate on estates can be as high as 55%.
What to do
If you are already a client of Lodmell & Lodmell, you can take advantage of the existing exclusion by contributing additional capital to your limited partnership and then gifting limited partnership interests to your loved ones. It’s best that you check with your CPA on the most effective way to incorporate your asset protection planning with sensible tax savings that are legitimate and only available for a very short period of time.
If, however, you don’t already have asset protection planning in place, then you should call our offices as soon as possible, especially if you are concerned about lawsuits and you want to take full advantage of the existing opportunity to give away some of your wealth tax free while staying in control of that wealth.
A Penny Saved is a Penny Earned
We don’t normally offer tax advice, but in this case the opportunity to save is so huge (and the cost of not doing so is very severe) that we would be remiss not to point it out, as it truly is an opportunity to protect your assets from needless taxation. If you have an estate that exceeds $5 million for single people or $10 million for married couples, then you need to act right now, or you will likely be very sorry if this opportunity forever ends on January 1, 2013.
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