Yes, 2012 is an excellent time to make gifts. We have an unusually high federal estate/gift tax exemption in 2012 that permits each taxpayer to transfer up to $5.12 million of property to children or other beneficiaries, without transfer taxes. If a taxpayer makes a gift in excess of that amount (or dies with an estate greater than that amount), the maximum gift or estate tax rate is 35% this year. In contrast, if Congress does nothing, the federal exemption amount will drop to $1.0 million on January 1, 2013, and the estate/gift tax rate will be 55%. So, gifting this year can save significant amounts of federal estate and gift taxes, can remove future appreciation in property from your taxable estate, and also can help minimize Washington state estate taxes, which do not apply to gifts.
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