Conditions favorable for gifts — High exemption amount and low tax rate make 2012 the year to transfer significant wealth
Abstract: Gift, estate and generation-skipping transfer tax exemption amounts stand at a record-high $5.12 million. And the top rate for all three taxes is 35%, the lowest it’s been in many years. So, with these set to expire at the end of the year, now may be the time to transfer substantial amounts of wealth to family members tax-free. This article discusses several strategies to do so, including trusts, life insurance and family limited partnerships. But a sidebar warns of the possibility of a “clawback” — in which the IRS attempts to impose estate tax on previous gifts to the extent they exceed the date-of-death exemption amount.