Janis Cowhey, Tax & Business Services Partner, Quoted in Associated Press Article "Coming Changes in Estate, Gift Taxes Stir ‘Frenzy’"

Excerpt:

Taxes that are largely a concern of the very rich will soon affect far more people unless Congress steps in.

The impending drastic changes in the estate and gift tax laws are prompting a flurry of activity as 2013 draws near. Family members are making financial gifts, creating trusts and considering other tax-minded moves.

Financial advisers, and trust and estate attorneys have been flooded with requests for assistance in the final months before the record-high exemption for both taxes is scheduled to plunge to $1 million from $5.12 million on Jan 1.

If unaltered, the value of any estate in excess of $1 million will be subject to the estate tax, at a top rate of 55 percent next year, before passing to family or other heirs. Currently the top rate is 35 percent, starting at a level more than five times higher.

“There’s been a little bit of a frenzy all of a sudden,” says Janis Cowhey, a principal with New York accounting firm Marcum LLP. “People are saying ‘Wait a minute, this is really going away. I need to do something before the end of the year.'”

GIVE AWAY CASH.

For the time being, taxpayers can gift as much as $5.12 million during their lifetimes without paying taxes. That total is above and beyond the $13,000 annual gift-tax exemption that many taxpayers are aware of. That exclusion allows you to make an unlimited number of gifts of up to $13,000 each year without incurring any taxes.

But gifts much larger than that will be needed between now and year-end to make a difference in estate and tax planning.

At the extreme wealthy end, McDonagh says one couple she’s advising wrote separate checks for $5 million to their adult children recently. It’s money the children would have inherited anyway, and now will be tax-free.

GIVE AWAY A HOME.

A real estate investor in her 50s, another of Cowhey’s clients, gave her Manhattan apartment outright to her daughter and now rents it back. A good pension, solid income and relatively low valuation of $400,000 gave her client the confidence to make the move in order to save on future estate and gift taxes, McDonagh says.

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