there are some very important steps that
everyone needs to understand about the
taxation of assets
and one of the the challenges of of good
estate planning is these laws are
constantly in flux right now congress is
considering laws to change
uh the way that we gift assets but as
the laws currently exist each person has
an exemption from a state tax or
inheritance tax of eleven million seven
hundred thousand dollars so for most
people everything they own
will pass tax-free to their heirs when
they die
now those laws can change there there
was a time when the amount that was
exempt from estate tax was six hundred
thousand dollars and so these amounts
that you can gift free of tax are
subject to the laws that congress passes
and currently those laws are very
generous
and so one of the things that we try to
encourage our clients to do
is to
focus on how what is the most effective
way to use that exemption whether it be
six hundred thousand or eleven million
seven hundred thousand
and what i mean by that if we wait until
they die
to use their exemption then the most
that we will ever move from their estate
is the amount of the exemption
but
if mom and dad are in a position to make
lifetime gifts
they can allocate part of that exemption
to that gift and let me give an example
of that if mom and dad have a business
and it’s worth a million dollars but we
think that it’s going to go up in value
let’s say in 10 years it’s going to be
worth 5 million dollars if mom and dad
make a gift today of a million dollars
and we allocate part of their exemption
to cover that gift
then all of that appreciation takes
place out of their estate and it’s not
subject to estate tax so by correctly
using
this estate tax exemption for lifetime
gifts you can sometimes give away much
more than just the exemption itself