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Saturday, December 1, 2012

Hesch: The Financial Danger of Maximizing Taxable Gifts in 2012

Jerome M. Hesch (Miami), The Financial Danger of Maximizing Taxable Gifts in 2012:

At present, clients and their estate planning advisors are contemplating making $5,120,000 taxable gifts (or twice that amount using the split gift election) before year-end because the gift tax exemption may revert to $1,000,000 starting in 2013. Before making the maximum taxable gifts for the remainder of the 2012 year, clients need to be made aware of the possibility that maximizing their taxable gifts can cause a financial hardship if the gifts are made to grantor trusts. Before making such gifts, clients and their advisors need to take into account the financial impact caused by the grantor having to pay the income taxes on the grantor trust's taxable income and take precautionary steps if those projections show that the income tax treatment will not leave the grantor with sufficient assets for support in their later years.

(Hat Tip: Lew Saret.)

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