A quick note on end-of-year gift and estate tax exemptions.
If Congress doesn’t act, the estate and lifetime gift tax exemptions, which are currently $5.12 million per person and $10.24 million per married couple, will expire at the end of 2012 and return to $1 million per person and $2 million per married couple in 2013.
Congress may choose to extend the current exemption amounts, or they may set the 2013 exemption at a number between this year’s exemption amount and $1 million per person, but it’s still unclear what will happen.
If Congress doesn’t act, one thing is certain, the amount you are allowed to give away tax-free will be much less beginning on January 1, 2013. If you intend to gift significant funds and reduce the size of your overall estate, now is the perfect time to consider doing so while the higher exemptions are still in place.
Several gift options may be available to you, and an estate planning attorney can advise you as to which option is best for you. Keep in mind that several of these options require appraisals or valuations by professional valuation firms to pass IRS scrutiny. Such valuations take time, so if you want to take advantage of these exemptions before year-end you must consider taking action now.