This might just be the year to give!
As the estate tax saga draws on, many have overlooked the gift tax and the current tax savings opportunities available. Currently, the gift tax rate is 35%, the lowest rate since the 1930s. The gift tax rate is set to increase to 55% in 2011. This 20 percentage point difference results in a 57% tax rate increase.
For those with significant wealth, reducing your estate through gifting may be an option to consider. However, as Paul Sullivan points out in his recent article, A Year to Give to Your Heirs, and Save on Taxes, there are many things to think about, including the potential psychological impact that could result from bestowing great wealth upon heirs and raising a red flag to the IRS.
Gifting as an estate planning technique has never been more attractive and for some it may make perfect sense.