Under current law, the present is a wonderful time for the wealthy to gift. Many wealthy people are taking advantage of current legal conditions to pass along significant wealth now as opposed to waiting until death.
However, there is an important caveat: you should only gift assets that you’re completely sure you will never need. If in doubt, do not gift.
For those with excess wealth, current law provides excellent incentives for gifting now.
- For example, in 2011 and 2012, you can gift $5,000,000 using your exemption and without incurring any transfer tax (i.e. gift tax.)
- This is $10,000,000 for married couples.
- The lifetime exemption amount returns to only $1,000,000 in 2013 and may not return to an amount as high as $5,000,000 any time soon.
- In all states that have abolished the rule against perpetuities, assets can remain in family dynasty trusts for generations.
- This means that family dynasty trust assets will not be subject to federal estate tax or generation skipping tax in future generations.
- Often life insurance is owned by family dynasty trusts which leverages the federal estate tax and generation skipping tax.
- Assets held in trust can be shielded from the claims of beneficiaries’ creditors. In other words, the vast wealth accumulates without the same risk from lawsuits.
- The Obama administration’s 2012 budget proposes that family dynasty trusts be limited to 90 years; but, trusts already in existence will be grandfathered under current law.
- It is wise to take advantage of legal and tax benefits when available because they can be taken away at any time.
The family dynasty trust is not for everyone, but you don’t need to be a Rockefeller or Gates to have one. If you have significant assets that you would like to gift to loved ones now, consult with a qualified estate planning attorney.
John Potter is an Estate Planning and Elder Law attorney in the Charlotte, North Carolina, area with offices in Ballantyne and Huntersville. John has been designated as a Certified Elder Law Attorney (CELA) by the National Elder Law Foundation and a Board Certified Specialist in Elder Law by the North Carolina State Bar.
John’s practice focuses on the use of Wills and Living Trusts in Estate Planning to help individuals protect their families and preserve their legacies after their deaths, but his practice also focuses on the critical issues of protecting individuals with dementia or other diminished capacity, assisting individuals in qualifying for Medicaid and other government benefits to offset the costs of long-term care, and providing special needs planning.
John is admitted to practice law in North Carolina, South Carolina, Kentucky, and Ohio, and he is accredited by the Department of Veterans Affairs.
John’s practice focuses on the use of Wills and Living Trusts in Estate Planning to help individuals protect their families and preserve their legacies after their deaths, but his practice also focuses on the critical issues of protecting individuals with dementia or other diminished capacity, assisting individuals in qualifying for Medicaid and other government benefits to offset the costs of long-term care, and providing special needs planning.
John is admitted to practice law in North Carolina, South Carolina, Kentucky, and Ohio, and he is accredited by the Department of Veterans Affairs.
Latest posts by John Potter (see all)
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