Gifting in 2012

By:  David R. Schoenhaar, Esq.*

2011 is coming to a close and the generous tax laws that went into effect on January 1, 2011 reunifying the estate, gift and GST exemption amounts to $5,000,000 are creating renewed interests in lifetime gifting. 

As discussed in a previous Blog, the sweeping legislation increased the gift tax exemption amount by $4,000,000 (from the previous exemption amount of $1,000,000), significantly expanding one's ability to make lifetime transfers without incurring a gift tax.  An overlooked provision of the new law is that the exemption amounts are subject to adjustments for inflation for those years beyond 2011.  This is good news for those able to make significant gifts in 2012 as the gift tax exemption amount increases an additional $120,000 to $5,120,000 starting January 1, 2012.  Now a couple can transfer a total of $10,240,000 during their lifetime free of gift tax.  The inflation factor also applies to the estate tax exemption amount but does not apply to the gift tax annual exclusion amount which continues to be $13,000 (or $26,000 if spouses elect to split gifts).

Accordingly, planners should inform their clients of the additional gift tax exemption amount for 2012 as new gifting opportunities may be available.

*David R. Schoenhaar, Esq., is an associate at Ruskin Moscou Faltischek, P.C. and is a member of the firm's Trust and Estates Planning and Litigation Department.

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