Word to the Wealthy: Don’t Look a Gift Tax in the Mouth
A New York Times article says that the 2010 gift tax is a tax-saving gift to the wealthy, and that individuals with more than $5 million and couples with more than $10 million should look long and hard at taking advantage of it in 2010 by making gifts.
The current gift tax of 35 percent is the lowest it’s been since the 1930s. But once the clock strikes midnight on Dec. 31, 2010, it goes up to 55 percent with an exemption of just $1.12 million. And, according to a number of financial experts, people who overlook this opportunity are going to miss significant tax savings in 2010.
According to the article, here are the comparative calculations on a $3 million gift to a grandchild:
2009: 110 percent (gift tax, generation-skipping tax and gift tax on the generation-skipping tax) = $6.3 million tax on $3 million gift.
2010: 35 percent (gift tax only) = 35 percent ($1.05 million tax on $3 million gift).
2011: 140 percent (gift tax, generation-skipping tax and gift tax on the generation-skipping tax) = $7.2 million tax on $3 million gift.
Many estate planning experts are counseling clients to not rush into anything, but to plan and watch what happens between now and the end of the year with estate tax debates in Congress.
Need help with your estate tax planning? Contact our Jacksonville Florida estate planning law firm.
