Why Make Big Gifts
Money Matters Radio – Estate Planning Q&A with Gary Goldberg
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Introduction/Overview: There is a $5 Million federal gift exemption. What should taxpayers consider doing in light of the state estate tax they might face in states like
√ Question: Why might taxpayers, especially older ones, want to make large gifts?
√ Answer: If your estate is under $5M why gift? If you die with $4.9M you won’t pay federal estate tax but you might pay $400,000+ in state estate tax. If you give it all away a minute before you die, no state tax and big savings!
√ Question: What if someone is sick?
√ Answer: Do a durable power of attorney authorizing unlimited gifts now, but be careful. That is a broad and dangerous power. This is a serious double-edge sword.
√ Question: Is there another approach?
√ Answer: Put your assets into a living trust and authorize two co-trustees to make gifts. Since the trustees have nominal legal title to the assets, in contrast to an agent under a power of attorney, this approach may be more practical to implement quickly, but it is not assured.
√ Question: Are either of these approaches practical? How fast can you move assets?
√ Answer: Great point. Instead give a selected person the power to revoke your rights in the living trust making it a completed gift without moving assets. It can be tedious to get a bank, investment firm or brokerage house to shift assets. The time these transfers take may prevent the planning you want. This is why, if you can get comfortable, other approaches are better.
√ Question: Anything cooler?
√ Answer: Sure fund a self settled domestic asset protection trust now in