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Unintended Consequences: How Using a Life Estate Results in Gift Tax Liability

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Using a life estate to transfer a house or other real property has been a planning technique used by many seniors. Many people who use this tool do so because it is quick and easy. In reality, what they are doing may result in a variety of unintended consequences. One of those consequences is that the person creating a life estate may unknowingly exceed their annual gift tax exemption.

Last Minute Tax Strategies for 2012

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Tick Tock. Tick Tock.  

Summer is almost over and the 2010 Tax Act is scheduled to sunset at the end of this year.   The result is the end of the extremely favorable estate, gift and generation skipping (GST) lifetime tax exemption (currently at $5,120,000 per individual or $10,240,000 per couple).  As it currently stands, the rates will drop …