The newly-passed American Tax Relief Act of 2012" sets a permanent lifetime gift tax exemption of more than $5 million. Thus, its likely many wealthy clients will continue to make large family gifts. If they are giving away hard-to-value assets, they might consider following a tactic from the Wandry case, decided by the Tax Court in 2012.
Here, Joanne and Dean Wandry had established a family LLC, which held marketable securities. In 2004, they decided to give away LLC units to family members. That year, the annual gift tax exclusion was $11,000 per recipient and the lifetime gift tax exemption was $1 million. Therefore, both spouses decided to give away $250,000 worth of LLC units to each of their four children, using up their lifetime exemptions, and to also give $11,000 of LLC units to each child and to each of five grandchildren.
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