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Mega gift may limit taxes for beneficiaries

Texas residents may be unaware that there are many strategies in estate planning designed to limit the amount of tax due at the time of death. These strategies can include trusts, wills and mega gifts. Early estate planning can help a person maximize the potential for tax benefits to an estate and its beneficiaries.

Estate planning experts suggest that one of the tools to consider is the mega gift. In situations where large amount of assets exist, it may benefit a person to give a gift in an amount less than $5 million to beneficiaries. Under the current combined gift and estate tax, a liability will not be triggered under that large amount.

At the end of this calendar year, officials report that the law may change in regards to the gift and estate tax. Though there are conversations in government regarding the upcoming change, under the current law the combined limit will drop to $1 million. This would mean that tax liabilities could arise in estates that have not planned for the upcoming limit adjustment.

As a Texas resident considers estate planning, a review of all available tools would be well advised. Many people find that a combination of estate planning strategies best satisfies their needs. This affords them the opportunity to make gifts both while alive and after death.

The value trigger for tax liability is something to consider as people review the assets in their estates. Homes, investments and insurance policies are just a few of the assets that many people hold. It would do well for a person to become familiar with current laws and possible changes for the near future as they work to create estate plans that best fit the intentions of the individuals as well as accomplish the goals set for bequests to beneficiaries.

Source: Forbes, "Should Threat of Clawback Discourage 2012 Mega Gifts?" Peter J. Reilly, March 13, 2012

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