7 Major Errors in Estate Planning* - Part 6 of 7

A recent article in Forbes listed one author’s opinion of the 7 Major Errors in Estate Planning.
The 7 Major Errors were listed as:

1. Not Having a Plan
2. Online or DIY Rather Than Professionals
3. Failure to Review Beneficiary Designations or Titling of Assets
4. Failure to Consider the Estate and Gift Tax Consequences of Life Insurance
5. Maximizing Annual Gifts
6. Failure to Take Advantage of the Estate Tax Exemption in 2012
7. Leaving Assets outright to Adult Children

Although not as successful as other literary series such as Harry Potter, Twilight, or The Hunger Games, our blog series has been fun to produce.  I am up again for exciting installment number Six!

6. FAILURE TO TAKE ADVANTAGE OF THE ESTATE TAX EXEMPTION IN 2012

We will be holding free seminars for clients and potential clients on this exact topic at 7:00 p.m. on June 26 at our Las Vegas office and at the same time on June 27 at our Henderson office.  If you have an interest in attending, please call us at 433-4455 to RSVP.

As we have stated before in earlier blog posts, 2012 is the perfect storm for gifting opportunities.  The gift tax exemption amount is currently reunified with the estate tax exemption and since the exemption amount is set to greatly reduce next year, and most people commenting on this issue feel that the likelihood of the gift tax exemption amount again being unified with the estate tax exemption amount is low.  In plain words, there is only 6 months guaranteed to be remaining where it will be legal to gift up to $5.12 Million without having to pay gift tax.  The amount will be $1 Million next year and the future is uncertain beyond that because Congress is likely to make a change to this element of the tax code, but not likely until after the Presidential election.  The ability to gift over $5 Million out of one’s estate can result in a great estate tax reduction opportunity for clients in the right wealth category.

A few techniques for accomplishing gifting (that will also be discussed at our upcoming seminar) include the following:

• Outright gifts to children or grandchildren (or through irrevocable trusts which is preferred and is a preview of episode 7).
• Qualified Personal Residence Trusts (QPRT’s).
• Intentionally Defective Grantor Trusts (IDGT’s).
• Spousal Limited Access Trusts (SLAT’s).
• Charitable Remainder and Charitable Lead Trusts.
• Grantor Retained Annuity Trusts (GRAT’s).

We could have a whole spin-off blog series on this topic alone to discuss these gifting opportunities. (Think “A Different World” as a spin-off to “The Cosby Show”).