Tuesday, February 15, 2011

The $5 Million Tax Break

Congress has set sweet new terms for the gift tax, and families are tearing up their estate plans to take advantage. Here's what you need to know.

By Anne Tergesen and Laura Saunders (WSJ Online)

Largely lost amid all the political drama surrounding December's historic tax legislation was a sweet deal for families.

For the next two years, the gift-tax exemption jumps to $5 million from $1 million for individuals and to $10 million from $2 million for couples—meaning people can give away that much without paying a penny in taxes.

What's more, the tax rate on gifts above those amounts fell to 35% from a scheduled 55%, a boon to ultrawealthy people who want to give away even more money.

Washington's unexpected largess is prompting many taxpayers to throw away their estate plans and craft new ones before the favorable terms expire. But while anyone with significant assets should consider retooling their strategies, there are many important considerations, financial and emotional alike.

Click here to read the rest of the article on WSJ.com


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