WSJ: Ten Questions to Ask Before Making a Big Gift This Year

As an appropriate follow up to our recent blog on charitable donations and the upcoming election, the Wall Street Journal this morning offers an article for everyone considering what to do given the current political climate.  A copy of the article is posted below:


Ten Questions to Ask Before Making a Big Gift This Year
By: Laura Sanders

With the fiscal cliff approaching, many wealthy people are considering whether to make large gifts before year-end – gifts far beyond the $13,000-per-recipient tax-free “annual gifts” many people make. Instead, they are designed to use up the “lifetime” $5.12 million-per-taxpayer gift-tax-exemption while it’s still firmly in place.

On Jan. 1, this exemption is scheduled to drop precipitously to $1 million per individual, as a result of the expiration of the 2001-03 tax cuts. Many experts think the exemption won’t stay at this level, if it takes effect at all. But depending on the election outcome, Congress may reset it at $3.5 million, as President Obama prefers.

For more about what could happen, see the Weekend Investor article “Countdown to a Tax Hike.”

For now, financial planner Mitch Drossman of U.S. Trust offers a checklist of questions for wealthy potential givers and their advisers.  With time running short to set up trusts and secure appraisals of property, the list offers a good overview of the issues involved in making a major gift.

  1. What if I make a gift of the full $5.12 exemption and subsequently Congress reduces the gift-/estate-tax exemption from $5.12 million to $1 million?
  1. Can I afford to make such a significant gift? How will it affect my lifestyle and cash flow?
  1. What assets could I give?
  1. What assets should I give?
  1. Does it make sense to borrow funds to make a gift before year-end?
  1. What happens if the assets I give permanently decline in value?
  1. Can I have access to the assets I give?
  1. Can I live with the complexity a gift might create?
  1. What if I have “giver’s remorse”?
  1. When should I begin the gifting process, and how long will it take?


DRC has already seen an increase in our estate planning practice and expects that trend to continue through year-end.  Make your appointments soon to lock in the best estate tax benefits this country has seen!

Submitted by Anna E. Lineberger, Esq.