Taking Advantage of Temporary Gift Tax Exclusion

Published on August 2, 2013 by

fred-corbalisThere is an interesting article in the Wall Street Journal today on taking advantage of the temporary gift tax exclusion. The gist of the article is that affluent families are “holding off” from gifting in some circumstances out of either (a) desire to not undermine the work ethic of their children or (b) fears of future financial insecurity.

These fears are legitimate but can be properly addressed with accurate planning.

With respect to undermining work ethic, there are a number of techniques that can ensure that a child does not have a “guaranteed” inheritance, especially while mom and dad are alive, but even after. There are also techniques which can remove family wealth from the estate tax system but provide for “recapture” in the event that mom and dad need to regain the funds in the event of a turn in fortune.

If designed properly, there is potentially an insignificant difference between lifetime planning and at death inheriting other than a huge amount of taxes are saved!