This page contains a Flash digital edition of a book.
Courtesy of: Jodie A Cohen, CFp®, CrpS® First Vice president, Financial Advisor - Morgan Stanley Smith Barney Las Vegas, nevada


ifting assets to loved ones while you

are alive can prove deeply satisfying, es- pecially if those assets are used to pay for meaningful fi nancial objectives like start- ing a business, purchasing a home or educating a grandchild. In addition, every gift you make removes as- sets from your estate and may help you achieve some of the following objectives: reduce estate taxes: A married cou-

ple gifting $26,000 annually to each of their three children over the next 30 years will have given away $2,340,000. At today’s 35% estate tax rate, that represents a tax savings of $819,000. transFer appreciation: If most of

your assets are invested in stock or real estate, you may experience substantial appreciation over your lifetime. Assets of $5 million appre- ciating at a hypothetical rate of 5% annually, for example, would grow to over $13 million in 20 years. At today’s 35% tax rate, your estate tax lia- bility would be more than $4.5 million. By imple- menting gifting strategies, you can remove both assets, as well as potential appreciation, from your estate. Conceivably, you could freeze the value of your current estate and transfer potential appreciation to your heirs. keep your estate intact: A large,

unexpected estate tax bill can force family mem- bers to sell real estate or other valuable assets that they would rather keep. A well-conceived gifting strategy can provide the funds necessary to meet estate tax liability and keep your assets where they belong with your loved ones. keep a Family Business thrivinG: The

opportunity to gift stock or ownership interest in a closely-held fam¬ily business is another gifting strategy that can remove substantial assets from your estate.

With the passage of the Tax Relief,

Unemployment Insurance Reauthorization and Job Creation Act of 2010 (TRA 2010), you have an unprecedented opportunity to remove assets from your estate through gifting strategies that can help reduce estate taxes and provide your loved ones with a more substantial legacy. This legislation increases the lifetime gift tax exemp- tion from $1 million to $5 million¹ and also en- ables you to continue to make annual gifts of

up to $13,000 a year¹ to each of your children, grandchildren or any other person you wish with- out incurring gift tax. However, you should note that this

opportunity may only be temporary. When the current tax legislation expires on December 31, 2012, Congress may keep exclusion and exemp- tion limits where they are, raise them, lower them or eliminate them. We can work with you and your attorney or tax advisor to develop and implement suitable gifting strategies. To learn more about the new gift and

estate tax legislation, gifting strategies and how you can potentially maximize your gift using life insurance, contact us for a copy of the brochure, Taking Advantage of the New Gift and Estate Tax Law.

For More information If you’d like to learn more, please contact Jodie

Cohen at (800) 247-2265, jodie.a.cohenpotter@ or

¹ Limits double for married couples ($10 million lifetime

gift tax exemption and $26,000 annual gift tax exemption). Morgan Stanley Smith Barney offers insurance products in conjunction with its licensed insurance agency affi liate(s). Since life insurance is medically underwritten, you should

not cancel your current policy until your new policy is in force. A change to your current policy may incur charges, fees and costs. A new policy will require a medical exam. Surrender charges may be imposed and the period of time for which the surrender charges apply may increase with a new policy. You should consult your own tax advisors regarding your potential tax liability on surrenders. Tax laws are complex and subject to change. Morgan

Stanley Smith Barney LLC, its affi liates and Morgan Stanley Smith Bar- ney Financial Advisors do not provide tax or legal advice. This material was not intended or written to be used for the purpose of avoiding tax penalties that may be imposed on the taxpayer. Individuals are urged to consult their personal tax or legal advisors to understand the tax and le- gal consequences of any actions, including implementation of any estate planning strategies, or investments described herein.

April 2012 • 9

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