James F. McDonough
Of Counsel
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Gift and estate tax laws allow Americans to make tax free gifts up to a certain amount. According to Bloomberg, Congress voted in December 2010 to increase that limit to $5 million for wealthy Americans, which led to a significant spike in the following years.
In 2012, U.S. taxpayers reported making $122 billion in nontaxable gifts, which is more than four times the amount seen in the past two years, Internal Revenue Service data showed. Much of this money came from the richest Americans, as $84 billion was in the form of gifts higher than $1 million, which were made by fewer than 30,000 people.
Lisa Featherngill, managing director at Abbot Downing – a wealth-management unit of Wells Fargo & Co. – told Bloomberg that wealthy Americans jumped at the chance to make tax-free gifts when Congress raised the limit.
“There was a huge scramble after 2010 to take advantage of the new law,” she said. “There was concern that the law was going to revert.”
Featherngill said she has six direct clients who have at least $50 million in investable assets, and all made large tax-free gifts in 2011 or 2012.
As of this year, the exemption amount is at $5.34 million, according to the Motley Fool, which means that very few people will actually have to worry about estate tax. However, even those that have an estate of more than $5.34 million can get around – or significantly reduce – their tax bill with some planning. For example, taxpayers can donate money to charities instead of paying it to the federal government.
- Practices: Tax and Trusts & Estates, Estate & Trust Litigation, Real Property Tax Strategies
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
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