Taking Advantage of the Gift Tax Exemption Over the Next Two Years

One way to get the maximum amount of money to your kids tax-free is to take advantage of the gift tax exemption during the next two years. If you and your spouse place $10 million into an intentionally defective grantor trust and pay the taxes, your child could receive over $43 million estate-tax-free if the assets grow at 5% for thirty years.

Some parents may want to go even further and give more than $10 million to their children in order to take advantage of the 35% gift tax rate before it rises again. Beware, however, that it’s possible that Congress may fully repeal the estate tax and that you may end up paying gift taxes for no reason.

See Paul Sullivan, More Money for Your Kids, CNN Money, Jan. 25, 2011.

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this to my attention.