Many Options for Using Gift Tax Exemption

Posted by adaniels in Blog on June 25, 2012

The $5.12 million lifetime federal gift tax exemption will expire after this year. Because of that, high-net-worth individuals and their financial advisors have been looking into how to put that exemption to good use, WealthManagement.com reports.

Compensation Strategies, Inc. surveyed a variety of financial advisors to see what they and their clients were going to do on the issue. According to the survey, the top gifting options including establishing personal trusts, gifting to relatives, establishing a dynasty trust for the relatives, giving assets to charities, creating an irrevocable life insurance trust, a grantor retained annuity trust, or an intentionally defective grantor trust, and giving gifts to multiple people.

The survey said that according to financial advisors, the most recommended advice is the following: “(1) establishing a residential trust, (2) transferring property with high appreciation potential, (3) creating a dynasty trust, (4) making outright gifts, (5) establishing an ILIT funded with a new life insurance policy, and (6) creating a GRAT.”

WealthManagement.com says that the results from this survey could create a “dialogue” between financial advisors and clients over what to do about the gift tax exemption.

Written by Lisa Swan

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