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Estate Planning: Steps You Can Take Now

Even if the Bush administration’s death and gift tax repeal is successful, its proposed decade-long phase-in likely will further complicate the lives (and deaths) of families with taxable estates. Here are some steps that may help (and generally won’t hurt) if you are seeking to transfer ownership of your family business (or other assets) across generations.

  • Continue to take advantage of tax-free gifting of up to $10,000 per recipient and $675,000 lifetime; particularly if difficult economic conditions or the plunging stock market have hurt valuations of your assets. Lower values allow you to gift more stock and stay within tax-free limits.
  • Hold off on big gifts that would trigger the gift tax. You don’t want to be the last person in America to pay gift taxes. *If you want to make large gifts, consider structuring them as loans which can be forgiven if gift and estate taxes end.
  • Don’t die. Actually, that advice is not as silly as it sounds. University of Michigan researchers who studied 13 estate-tax changes between 1917 and 1984 found that a $10,000 estate tax savings boosts the chances of dying before the increase by 1% and the probability of dying after a tax cut by 2.5%
 

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