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Big deadline for big gifts
As we progress through 2012, you are going to be seeing more articles like the one published this week in the Wall Street Journal titled "Consider Big Gifts to Family This Year." If you havenít already done so, you are probably going to want to talk to your high net-worth clients about the gifting opportunity. Donít let too much time slip by.
The whole issue revolves around the fact that we all currently enjoy a $5.12 million lifetime exemption for taxable gifts, above and beyond the $13,000 annual exemption. But come January 1, 2013, we may no longer be enjoying that opportunity as the $5.12 million exemption is to be replaced with a $1 million exemption. Yes, this could be a case of be ďuse it or lose it.Ē
But who wants to use it when it means irrevocably forking over millions of dollars to other family members?
Thatís where 529 plans come in. Letís say that your client, a grandparent, has ten grandchildren and you suggest that he or she consider contributing $300,000 to a 529 plan for EACH grandchild. Thatís $3 million in gifts, so now it takes only $2.12 million of other gifting, beyond annual-exemption gifts, to take full advantage of the $5.12 million opportunity.
The grandparent in this example continues to fully control the $3 million of 529 funds, and can even take it back in a pinch. Ah, now doesnít that feel much better?
Perhaps a follow-up to the WSJ article could be suggested, titled ďConsider Big 529 Contributions for Family This Year.Ē