Gifting is good. Gifting to children to lock in the $5.12 million estate planning tax exclusion is very good—except when clients gift away too much.

"We have had clients make such large gifts before they consulted their financial advisor to see if they could 'afford' to make such a gift and still maintain their own standard of living in retirement," says Susan Hartman, a wealth strategist at Raymond James who specializes in retirement and tax and estate planning issues. She and other estate attorneys have seen clients make mistakes in trying to plan for life after their death—and some are doozies. "One of the number one problems with estate planning is when the tax tail has wagged the financial planning dog," Matthew Erskine, an estate planning lawyer in Worcester, Massachusetts, adds. "People go deer-in-headlights, saying 'Oh my God, taxes, taxes, taxes!' That's irrelevant," Erskine says. "There are an enormous amount of techniques for reducing or eliminating taxes. It's not about taxes, it's about wealth transfer."

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