December 2012 Archives

What's up with Congress?

December 27, 2012, by

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Saturday, December 22nd. Lars is at his CPA office, making sure details are worked out for a few clients making year-end gifts. Nobody knows what Congress will do with the estate and gift tax laws in 2013. The gift tax exemption might drop from $5 million per giver to $1 million, but Lars doesn't think that's probable.

One of Lars's clients is a newly-widowed woman whose husband had a successful business. She's not old, but she's not young. She has been trying, with Lars's help, to determine whether to make large gifts of company stock or other assets, to her children before year-end. This ain't right that she has to wrestle with this so soon after her husband died, Lars muses. Even if Congress puts something together this last week of the year, the widow has still been burdened with worried uncertainty.

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A flurry of gifts, but not heavy snowfall.

December 20, 2012, by

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It has been a busier than usual first half of December for our CPA friend Lars, with a number of clients deciding late in the year to take advantage of the $5 million gift tax exemption that might be reduced in 2013. It's the 16th, and he's out taking one of his early Sunday walks along the gravelly beach. He and Kyra came out Saturday evening for a one-night stand, they like to call these short visits. Drizzle this morning but he doesn't notice it; he's preoccupied with broad thoughts about his work. He loves to get his perspective back at the beach.

Yes, a number of clients making large gifts, but not even most of them who could. And among those who are giving big, few are going to the max. Of course the max is $10 million for a couple, and while Lars has more than his share of very successful clients, $10 million is still a lot in his medium-sized city. He had wondered earlier in the year why few were taking advantage. Now with the deadline looming and the Democrats keeping the White House, more were motivated but not the majority.

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A flurry of year-end gifts (cont'd).

December 13, 2012, by

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Duncan arrives on time for today's meeting with his and Lars's mutual client Jack. Retired rich guy Jack, as is his custom, came in way early and has been distractedly paging through magazines and watching the door for Duncan. Lars was informed of Jack's early arrival but knows better than to go out and try meaningless conversation when Jack really just wants to have the meeting.

They wander into the conference room; Lars's office is large enough but too messy. They all know the purpose is to determine year-end tax-saving gifts for Jack and his wife Andrea, who have already turned their business over to two of their kids (no easy task), but still own a lot of real estate including the business facility, and a large portfolio of cash, stocks, and bonds.

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A flurry of year-end gifts.

December 6, 2012, by

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Our CPA friend Lars had observed earlier in the year that surprisingly few clients were taking advantage of the $5 million gift tax exemption that is likely to be reduced after 2012. He had even come up with a few theories why. He had forgotten about the simple factor of procrastination. Now that December has arrived, a number of his clients are calling and asking how they can take advantage.

Most of these clients aren't quite sure what the rules are, but they've heard of the chance of an unfavorable change. Lars tells them what he knows, that in 2012 each person may give away $5 million without paying gift tax. If a person has made large gifts before, in excess of the now $13,000-per-recipient annual gift tax exclusion, those other large gifts will count against the $5 million. And any of the $5 million used by gifts, will count against the estate tax exemption. These are the Federal rules; in Lars's State of Washington gifts are entirely tax free: they aren't counted against the now $2 million estate exemption.

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