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Estate gift tax-free deadline is approaching

At the end of every month, people look at the calendar and ask themselves where the time has gone. We are at that point again, and soon we will be at the end of another year. This year, December 31 holds a special meaning for taxes and estate planning. Currently, through the Tax Relief Act of 2010, people who wish to gift money to their relatives will be allowed to give them up to $5 million instead of the usual $1 million without paying gift taxes.

While this number might seem high, it is important to remember that any person can gift money to another person, no matter their income level. Many times people wish to leave money to their relatives after they pass away. The relative may have to pay taxes on that money, but until the end of this year, those taxes can be avoided. It is important when considering a gift to a relative to think of the tax implications as well as estate planning implications.

While this might be a generous gift to a loved one and way to avoid paying taxes on the money, it is important that this gift doesn't change the overall goals of a person's estate plan. Speaking with a tax advisor as well as an estate planning attorney can help make sure that such a gift is the right thing to do. Although this gift might benefit your loved ones, it shouldn't set a person back financially or limit their future financial security.

An experienced estate planning attorney can review the entire estate to make sure everything is in order before and after a large gift.

Source: Smart Money, "Beating the Next Tax Deadline," Sept. 24, 2012

-Please visit our firm's website to learn more about estate planning in New Jersey.

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