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Currently gifts and estates of up to $5.12 million are exempt from taxes, but as part of the fiscal cliff, any portion of a bequest that exceeds $1 million will be taxed next year -- and at a 55% rate (currently, the rate is 35%). That will kick in unless Congress and the president agree to extend the current exemption or agree on a new one. Many older Americans are not waiting to see if that happens.

"It's crazy," said Richard Behrendt, Director of Estate Planning for Baird's Private Wealth Management. "I bet more wealth is transferred this year than in the past 10 years combined."
Jonathan Blattmachr, a principal of Eagle River Advisors in New York who has lectured groups of estate planners about the expiring exemption, said the amount given away in 2012 will be three or four times that of any other year.

The drop to a $1 million exemption means that the tax bill on gifts or estates of $5.12 million will go from zero this year to $2.266 million next year, according to Blattmachr. The gridlock in Washington could result in the exemption staying that low, perhaps for years.

"The fear is that we'll go over the fiscal cliff and never correct that," said Robert Keebler, a Green Bay, Wis.-based estate planner.

As long as the exemption stays at the million-dollar level, the estate of anyone who dies will have to pay at the higher rate, he said.

Estate and gift taxes affect not just the very wealthy. Many middle-class Americans have assets of more than a million. Now, they may feel like they need to give away more of their wealth before they die.

Not everyone who can transfer their money should do it, said Behrendt. Sure, if they're 93 years old and failing, it's a good idea. Others should proceed with caution, being careful not to part with assets they might later need.

"I worry about 65-year-old, recently retired couples on fixed incomes with $3 million or $4 million in assets reading about what a tremendous opportunity it is," said Behrendt.

Also, many people may be under the impression that if they give a gift below this year's $5.12 million exemption level, they'll still have some exemption left to use in the future. But any gift made this year counts against the exemption in effect the year they die. So if the exemption drops, as scheduled, to $1 million in 2013, a gift of a million or more made anytime in the past completely exhausts the exemption. The entire remaining estate will be taxed at 55%.

They also have to understand that, to qualify, the gifts must be permanent and irrevocable. The asset doesn't belong to them any more.

For example, many couples consider transferring their home, which is often their biggest asset, but want to remain living there for a while.

They can do that through a personal residence trust but since these cannot be sold while the trust is in effect, most people prefer another kind, a qualified personal residence trust.

Those, however, come with their own restrictions. For one thing, the givers must specify a term for the trust, the length of time they'll stay before their heirs take possession. Choosing the right term is crucial. The givers may be in good health and figure they have a good 10 years before they'll want to move. But if they die before the 10 year term is up, the house reverts back to the estate. "Then it's taxed like it was never given away," said Blattmachr.

Gifts made this year can keep on giving if astutely chosen, according to David Hryck, U.S. Head of International Tax at SNR Denton. That's because the value of transferred assets are figured at the market value at the time of the gift.

Thus, a $5 million stock portfolio transfers for free this year and any amount it appreciates between now and when the giver dies escapes the death taxes it would have been subject to had it not been given away.

Choosing what assets to transfer, then, is an issue.

"You have to do the math," said Hryck, an adviser to major entertainers and businesspeople. "You have to pick and choose which asset to give. You want to give away the one that will go up most in value."

If, for example, there's a choice between a hot tech stock and a slowly appreciating real estate holding, gifting the stock means the estate will pay less in tax.

But you never know. The tech company stock could tank and a new housing boom could send real estate soaring.

As the old Yiddish saying goes: Man plans and God laughs.

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Chloe

til I saw the paycheck which said $7938, I accept ...that...my mother in law woz trully taking home money part time from there pretty old laptop.. there sisters neighbour has been doing this for only 18 months and as of now repayed the morgage on their mini mansion and bought a great Lancia Straton. we looked here, Great60.com

December 17 2012 at 12:07 AM Report abuse rate up rate down Reply
coochiescooter

harlson Obama got re-elected, never underestimate the power of stupid people in large numbers, of course he promised free stuff too for votes.

December 15 2012 at 12:41 PM Report abuse rate up rate down Reply
harlson

if so many NOBAMA ones in these comments .. how the hell did he win??

oh.. by the ones that can't type or read.. the majority..
as pissed off whites .. are now the minority..

how ya all liking the muslim now ..

December 15 2012 at 12:57 AM Report abuse -7 rate up rate down Reply
2 replies to harlson's comment
boehnerisababy

harlson
if so many NOBAMA ones in these comments .. how the hell did he win?
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The reason Obama won is because we republicans are just brain dead.

December 15 2012 at 12:12 PM Report abuse +2 rate up rate down Reply
1 reply to boehnerisababy's comment
coochiescooter

Look who is calling people brain dead. Captain fried cranial Evan Barthold

December 15 2012 at 12:18 PM Report abuse -1 rate up rate down
coochiescooter

Voter registration fraud, food stamp and welfare.

December 15 2012 at 12:38 PM Report abuse -1 rate up rate down Reply
rfrf6672

I hope all those wealthy celebrities who cried there hearts out in campaign commercials how badly they needed Obama to win a second term are comfortable with the fact that they sooo desperatley needed Obama to win a second term so they could lose millions of dollars in taxes .

December 14 2012 at 11:17 PM Report abuse -6 rate up rate down Reply
obamasafiasco

phasejump
omg cry me a river for the richest of the rich

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Phasedump will be crying a river when there's no one left to fund his welfare check.

December 14 2012 at 9:39 PM Report abuse -13 rate up rate down Reply
1 reply to obamasafiasco's comment
s.kohanski

He can move to Cuba, they like Com/Libs there.

December 14 2012 at 9:44 PM Report abuse -10 rate up rate down Reply
obamasafiasco

teapartyiswhacke
When our forefathers wrote in the Constitutuion, the right to bear arms America back then didn't have as many guns as there is today. Today, mentally unstable person can get a gun, terrorist can buy a gun, the Mexican Cartel can buy a gun here in the USA. If our forefathers were to see what is happening today they would be rolling in their graves!!!!!!!

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Yeah and now if you need a gun the Obama adminsitration will just give you one like they did with the Mexican drug cartels.

December 14 2012 at 9:37 PM Report abuse -12 rate up rate down Reply
1 reply to obamasafiasco's comment
s.kohanski

Evan can't handle the fact that Obama and Holder aid terrorists and drug cartels.

December 14 2012 at 9:39 PM Report abuse -10 rate up rate down Reply
4 replies to s.kohanski's comment
obamasafiasco

Alan
I feel bad for the wealthy. It won't be long before they can't afford to buy politicians.

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I feel bad for the Obamabots. It won't be long before the wealthy will no longer afford to fund the Obamabots welfare checks.

December 14 2012 at 9:35 PM Report abuse -8 rate up rate down Reply
obamasafiasco

rickperryoops
Did somebody say oops? I mean opps......HEE......HAW!!!!!!!!!!

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Another pathetic screen name created by an Obamabot.

December 14 2012 at 9:32 PM Report abuse -11 rate up rate down Reply
obamasafiasco

teapartyiswhacke
We already know Obama cares, that is why he beat Mitt Romney. Mitt Romney and the republicans don't care, that is why they lost the 2012 elections..............

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Obama only cares about Obama. Obamas is one of the 1%.

December 14 2012 at 9:31 PM Report abuse -9 rate up rate down Reply
s.kohanski

Obama care strikes again.

December 14 2012 at 8:38 PM Report abuse -11 rate up rate down Reply