The Best Time to Gift Money to Your Heirs is Now

If you have been considering strategies for passing some of your wealth on to heirs as tax efficiently as possible, you might want to know about an important window of opportunity for gifting. It’s available right now, but it may not be beyond 2012.


Among the many tidbits found within the December Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 are particularly favorable gift tax exemptions: an increase for lifetime tax-free gifting to $5 million/$10 million for individuals/couples, up from $1 million/$2 million. And if $5–$10 million isn’t enough, the tax rate on lifetime gifting amounts beyond that was set at 35%, rather than the scheduled 55% rate.


It’s important to note that the annual gift tax exclusion, which is separate from the aforementioned lifetime caps, remains only $13,000 per donor per year. Even so, as this helpful Wall Street Journal article notes, taken together, the new estate and gift rates are the most generous since 1931. In other words, for wealthy individuals or couples seeking gifting opportunities, there may be no time like the present for some careful planning with a knowledgeable estate tax planning team. While the favorable conditions may last beyond 2012, they may not.


Need additional advice? Give us a call. Considering and effectively implementing multi-generational wealth management strategies is core to our services.

About the author

Tom Posey, CFP®, J.D., AAMS

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  • My 88 year old mother received a notice from the bank that holds her IRA telling her they will now begin charging $30 a year to process her IRA because it’s under $5000. Can she withdraw all of the remaining funds without penalty? If not, any suggestions as to how she can roll that into a savings account or CD? Thanks.

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