Gifting: It Will Never Be Cheaper Than in 2010

January 21, 2010

While waiting to see if Congress decides whether or not to reinstate the estate tax (which is zero in 2010), there are some actions you can take today to pass on gifts to your children and grandchildren.  There is a $1 million lifetime exemption and the tax rate in 2010 is 35% or any amount in excess of the exemption amount. This is down from 45% in 2009.

The numbers are compelling compared to giving the gift in your will. A gift of $1,000,000 now requires only $1,350,000 (no gift tax in New York). If it is a testamentary bequest, and the estate is taxable, it could take over $2,170,000 to make an equivalent wealth transfer, assuming the decedent lived in New York.

If Congress does not take action to change the law during 2010, the federal tax comes back in 2011 with a top rate of 55% and a life time exemption of $1 million. This makes it attractive to take action early in the year, before law makers decide to take action.

For more information, please contact your PerelsonWeiner partner. 

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