A last-minute planning opportunity

Life has no blessing like a prudent friend.

- Euripides

As I write this on Monday, I’m still a little bit “cookie drunk” from the weekend. To the gym–soon!

But before I get there, I wanted to write this up and set it into place so you’ll get it this week. You see, I truly hate “springing” these items on my clients and friends, but I’ve just been made aware of an aspect of the recently-signed tax agreement which you should certainly consider.

(And, of course, feel free to pass this along to friends and family who may benefit — this is one to be shared).

Generation-Skipping Gifts Opportunity

The practice of giving (tax-free) gifts to your children, in advance of estate transfers, has been around for a while. But any gift of over $13,000 has always been subject to the “Generation-Skipping Transfer Tax”. This tax was set up in the eighties to prevent asset transfer for the purpose of avoiding said estate tax. It is typically the same rate as the estate tax. So, any gift over $13K would be taxed at those rates.

But not right now, it’s not.

You heard me right.

With the (recently-signed) tax agreement, the tax rate is ZERO for any “generation-skipping” transfer made by 12/31/10.

Now, this won’t apply to everyone, of course, but this is a welcome opportunity for the right situation. And you’ll need to act quickly, because beginning January 1, 2011, the tax rate for these transfers will be 35% (the same as the new estate tax rate). Further, that rate is set to go back to 55% in two years, unless Congress changes it again.

The best part? Even if you don’t yet have grandkids, you can take advantage of this “loophole” by setting up the right vehicles now.

But you’ll have to act quickly. These sort of moves are what we routinely “pull off” on behalf of our clients, and if you contact us quickly ((909) 843-6427 or by sending me an email), we can put the papers together to make it happen for you.

Again, this won’t apply to everyone … but if you think a friend might be interested, feel free to send them this email and have them contact us.

And, on the early note — let me wish you a premature Happy New Year, 2011!