It's official: President Obama has signed into law new Estate and Gift Tax legislation that, while no providing complete repeal of the federal estate tax, does provide that all but the wealthiest estates will remain exempt from the imposition of federal estate taxes. The fundamental provisions of the law are outlined here.
In my view, the most dramatic impact of the law is the new $5 million per person lifetime gift tax exemption. Through 2010, lifetime non-charitable gifts (beyond the $13,000 per donee annual exemption gifts) made by any donor in excess of the cumulative sum of $1 million were subject to a gift tax at a rate of 35%. In 2011 and 2012, donors can make cumulative gifts of $5 million without the imposition of any gift tax. This hugely expanded amount will provide wonderful opportunities for owners of closely-held businesses and valuable real estate holdings to transfer those assets to their children and grandchildren without being subject to onerous gift taxes. And, many clients will likely elect to make such transfers without relying upon valuation "discounts" that have forever been subject to IRS attacks.
If you have ever considered making large lifetime gifts to your loved-ones, the next two years might provide the best planning opportunities in our lifetime!
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