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The Expiring Exemption

The Menashe Morley Group

The Expiring Exemption

This is a recurring column from Merrill Lynch wealth management advisors David Menashe and Bruce Morley of The Menashe Morley Group, who have worked in Rancho Santa Fe for more than 28 years.


While there’s been much discussion about expiring tax rates, there’s been little talk of an important tax provision that’s also about to dramatically change: the combined estate and lifetime gift tax exemption. With this provision set to expire at the end of 2012, it’s important to look carefully at your assets to see if you can use the exemption now to help maximize your wealth for future generations.


The estate and lifetime gift tax exemption currently allows someone to bequeath or “gift” up to $5.12 million in 2012 free of any federal gift or estate taxes. That means someone of high net worth could gift $5.12 million into a dynasty trust, for example, for the benefit of their eventual heirs. They would have effectively passed $5.12 million to their heirs now instead of waiting until their death, when their estate may not be entitled to as large a tax exemption.


Unless the current tax law is extended, beginning in January 2013, anyone who passes away or makes a gift will only be able to pass along $1 million exempt from federal estate and gift taxes. For high-net worth individuals, it may make financial sense to make any gifts this year so they can shelter more of their wealth from estate and gift taxes. 2013 is fast approaching and transferring wealth involves many processes that may take longer than expected. (858.381.8113)


The Menashe Morley Group
The Menashe Morley Group

Any information presented about tax considerations affecting client financial transactions or arrangements is not intended as tax advice and should not be relied upon for the purpose of avoiding any tax penalties. Neither Merrill Lynch nor its financial advisors provide tax, accounting, or legal advice. Clients should review any planned financial transactions or arrangements that may have tax, accounting or legal implications with their personal professional.


Photo by Andy Templeton



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