Wealthy Californians who dropped a sizable gift on heirs in December due to uncertainty about estate and gift taxes may be having what financial experts are referring to as “gifting remorse.”
In a move that surprised many estate planners, Congress made permanent the estate and gift tax exemption at $5.12 million per person, and adjusted it for inflation. For 2013, the IRS has announced the estate and gift tax exemption will be $5.25 million, or $10.5 million for married couples. This made the new year a little bittersweet for some, who may have felt they rushed into giving too much too soon to beneficiaries.
However, those experiencing “gifting remorse” should take heart. There are some perks for having made gifts before the end of 2012, including:
Gifting early can provide more bang for the buck. If your gift including shares of stock, it may be an advantage to gift early. If you had waited longer, and the stock appreciated, you would not have been able to gift as many shares, which would have led to a larger tax bill down the road.
If you made a gift via a trust, those assets are now well protected from creditors.
Many trusts include a right of substitution clause, so if you regret gifting a particular asset, you should be able to substitute another asset of equal value.
In addition to these advantages, benefactors should be able to rest a little easier realizing that they have the bulk of their estate planning in place, and can improve upon it going forward. Plus, there’s also the benefit of seeing how gift recipients handle their windfall. This may – or may not – change the way you structure inheritances in the future.
The Flanigan Law Group provides Southern California residents with personal attention for estate planning, administration and litigation legal services. When disputes between families, arise, they are very successful in resolving legal estate issues quickly and efficiently while preserving financial and emotional resources. Contact the Flanigan Law Group at 949-450-0042.