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New Tax Law Increases Lifetime Gift Exemption from $1 to $5 million



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Happy New Year! May we suggest a resolution?

There was good news on the estate and gift tax front included in the package of tax bills that passed at the end of 2010.  As we ring in the New Year, you should resolve to review your estate planning documents and your gifting plans.

One change, in particular, provides either a window of opportunity or perhaps a permanent change to the gift tax regime.  Lifetime gifts, which used to be limited to $1 million per donor, are now $5 million per donor.  This means that, if you are in the fortunate position of having $5 million more than you need, you can give it to your family members without paying any gift tax.  In the case of a married couple, the total will double to $10 million in total beginning this year.

We have clients who have, in the past, been interested in making larger gifts to their children and grandchildren.  However, even if we could make a good intellectual and mathematically appealing case for making gifts larger than $1 million, most people just didn’t want to part with the money to pay the gift tax for the larger gift (under the old law).  Now the bar has been lifted, and significantly!

As the year wears on, you will read plenty of analysis about the various, more complex changes in the laws, but for those in the fortunate position of having more than they will need, this is a significant change for the better and should make your personal priority list.

As always, your personal planning should be just that, “personal”, beginning and ending with your personal goals and wishes.  In addition, good advice will be important, as there are many related issues to consider, including the temporary nature of the new exemption.  Please call us if you have any questions or comments or would like to discuss the implications to your particular situation.

Best wishes for a joyful and rewarding 2011!

Horizon Wealth Advisors
Horizon Wealth Advisors is a Houston-based, privately owned, fee-only financial advisor established in 1999. Our mission is to develop long-term relationships with thoughtful, successful individuals, families, and organizations by supporting and assisting them in achieving their financial goals.

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