Aug 24, 2012

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Valuation NewsFlash: Time is Running Out on Tax-Free Gifts

With the passage of the 2010 Tax Relief Act, Congress made it easier for business owners intending to make a substantial wealth transfer by increasing the lifetime gift exemption cap for 2012 to $5.12 million per person.

In the past, business owners structuring a major wealth transfer to their children often ran into the problem of not having enough lifetime gift exemption… and business owners were reluctant to pay gift tax on such a transfer. The expanded lifetime exemption cap gives business owners an unprecedented opportunity to shift business interests to their children and reduce the size of their estates, tax-free.

This golden opportunity offered by the 2010 Tax Relief Act is temporary, however! As it stands now, starting in 2013 the lifetime gift exemption cap will be reduced to $1 million per person.

As always, a properly executed estate planning strategy involving transfers of business ownership interests will require an objective and well-supported valuation analysis. For information about how Aronson LLC can provide assistance in this area, please contact Bill Foote at 301.231.6299.