The problem is that few professional advisers understand the issues and opportunities surrounding the gifting of legacy assets, and even fewer owners of legacy assets are even aware that such planning is possible.
Did you know 2013 is looming on the calendar as a huge unknown when it comes to taxation? In fact, when it comes to 2013 taxation, the future may be catastrophic for estate tax planning. On the other hand, the clock continues to tick away on some incredible wealth transfer opportunities for 2012.
These last few months are either a time to seize the unprecedented gifting opportunity of a $5.12 million gift tax exemption, or a time to run out the clock on this opportunity perhaps for the rest of your lifetime. The gift tax exemption is scheduled to return to $1 million.
If you are looking to seize the opportunity in 2012, then you will find encouragement in a recent Forbes article titled “Romney Wants No Estate Tax - Case For 2012 Mega Gift Remains Compelling.” In short, the article notes that there are ways to give now without spoiling future opportunities, if you think carefully about the right kinds of assets to give. The author of the article calls such strategic assets “legacy assets,” and offers this quote from an attorney comrade:
Legacy assets are ideal for the “megagift” for several reasons:
- art, real estate, family business interest and other Legacy Assets are secular investments, that is held for more than 10 years, and so the gifting of an asset does not substantially reduce the lifestyle or disposable financial wealth of the client,
- The financial value of Legacy Assets is not correlated to the investment market,
- The personal and social value of legacy assets is both real and significant,
- Since there is both a financial and a social value to the ownership of legacy assets, they work well with charitable split interest trusts that can significantly leverage the Unified Credit, and
- There are techniques that can be used with legacy assets that cannot be used for investment assets.
So, 2012 - Mega Gift or not, legacy assets are worth considering. If beating the 2012 clock appeals to you, then you better get a move on it. The ball in Time’s Square seems to fall earlier each passing year.
You can also friend me on my office's Facebook page (R Christine Brown). I post information and interesting articles I come across on elder law and estate planning topics every day.
Reference: Forbes (October 14, 2012) “Romney Wants No Estate Tax - Case For 2012 Mega Gift Remains Compelling”