Year-End Estate and Gift Tax Planning: Practical Tips and Techniques to Help You Save
November 18, 2008
As 2008 comes to a close, now is the time to evaluate a number of opportunities available to help you save. Making gifts of stock and business interests to family members and charities by year-end can yield estate and gift tax savings, especially if you use techniques that take advantage of current low interest rates and asset values.
Annual Gifts – New Amount for 2009
As December 31 approaches, consider making gifts to take advantage of the $12,000 annual exclusion for 2008. A married couple can make gifts totaling $24,000 to each recipient. Note: the annual exclusion increases to $13,000 on January 1, 2009.
GRATs – Take Advantage of Low Interest Rates and Possible Appreciation in Asset Values
One gift and estate tax savings technique that works well in times of low interest rates is a grantor retained annuity trust – a “GRAT.”
Any individual who has reached age 70½ can make direct transfers from his or her IRA account to a charitable organization that has 501(c)(3) public charity status. The provision allows up to $100,000 per person to be gifted directly from an IRA in 2008 and another $100,000 in 2009. This direct transfer removes the gifted assets from your adjusted gross income for federal and state income tax purposes, as well as for estate planning purposes.
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The Estate Planning Group would be pleased to consult with you on these and other planning techniques. Please contact your estate planner or ask for a member of the Estate Planning Group at 513 381 2838 (Cincinnati and Columbus), 317-713-3500 (Indianapolis), 937-228- 2838 (Dayton), and 216-241-2838 (Cleveland), 859-331-2838 (Kentucky).
Annual Gifts – New Amount for 2009
As December 31 approaches, consider making gifts to take advantage of the $12,000 annual exclusion for 2008. A married couple can make gifts totaling $24,000 to each recipient. Note: the annual exclusion increases to $13,000 on January 1, 2009.
GRATs – Take Advantage of Low Interest Rates and Possible Appreciation in Asset Values
One gift and estate tax savings technique that works well in times of low interest rates is a grantor retained annuity trust – a “GRAT.”
- You irrevocably transfer property, such as stock (including S-corp stock) to the GRAT. Choose property that you believe will appreciate in value over the term of the GRAT, which can be two years or longer. You can be the trustee of your GRAT during the term.
- The GRAT makes annuity payments to you during the term. If the assets in the GRAT appreciate at a higher rate than the rate the IRS’s assumes (currently 3.6%), then the amount by which the actual return has out-performed the IRS assumed return will pass to your children free of estate and gift tax.
Any individual who has reached age 70½ can make direct transfers from his or her IRA account to a charitable organization that has 501(c)(3) public charity status. The provision allows up to $100,000 per person to be gifted directly from an IRA in 2008 and another $100,000 in 2009. This direct transfer removes the gifted assets from your adjusted gross income for federal and state income tax purposes, as well as for estate planning purposes.
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The Estate Planning Group would be pleased to consult with you on these and other planning techniques. Please contact your estate planner or ask for a member of the Estate Planning Group at 513 381 2838 (Cincinnati and Columbus), 317-713-3500 (Indianapolis), 937-228- 2838 (Dayton), and 216-241-2838 (Cleveland), 859-331-2838 (Kentucky).
