Bad economy makes for good gift and estate tax planning

In a comprehensive article entitled Why Now Is the Time to Help Your Heirs, Wall St. J., Oct. 18, 2008,  Anne Tergesen explains a variety of effective gift and estate tax saving strategies which are especially effective in our troubled economy.

Here are a few methods to consider:

• Make annual exclusion gifts of stock or other property which has decreased in value.  The value for gift tax purposes is the value at the date of gift.  If the value of the property rebounds, the “real” value of the gift may exceed $12,000 by a signficant amount.
• Loan money to family members using the applicable federal rate which is relatively low.
• Create a intentionally defective grantor trust.
• Form a grantor retained annuity trust.
• Establish a charitable lead annuity trust.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.