Q. I heard from my financial planner that 2012 is a great year to make large gifts. What are some ways I can make these gifts?
A. In light of the increased exemptions, those who wish to make substantial gifts of assets should take advantage of the wealth transfer opportunities now and act promptly. Significant gifts may be made through a host of different methods, including the following:
• Take advantage of the increased exemption by year end, while removing future appreciation from your estate.
• Valuation discounts for lack of marketability and minority interests may be available upon the gift of certain assets such as interests in closely-held entities.
Gifts in Trust, Including:
• Inter-Vivos Spousal Trusts. Spousal Trusts established during lifetime may take advantage of all or part of the gifting spouse’s federal exemption amount, and remove the future appreciation of those assets from his or her estate. Such a trust may be structured to provide for discretionary distributions of the trust assets for the lifetime benefit of the donor’s spouse or sprinkled among the donor’s spouse and descendants, and then upon the death of the spouse, retained in further trust for the benefit of the donor’s descendants.
• Multigenerational Trusts and Perpetual Dynasty Trusts. These trusts may be established to benefit children, grandchildren and beyond and may be funded by a husband and wife with up to $10,240,000 free of gift or GST tax (assuming no prior use of those exemptions). Once funded, the assets, and any appreciation thereon, will be free from further gift, estate or GST taxes.
If you have further questions about wealth transfer options, you should seek the advice of an attorney.
Patricia Galteri is Chair of the Trusts and Estates Practice Group in Garden City, NY. Her practice includes the development of estate and family business plans to ensure the tax efficient transfer of wealth to the next generation while meeting the specific personal goals of her clients.