It has been hard for any international lawyers dealing with US clients to ignore the sweeping provisions of the FATCA Act, but this tax compliance juggernaut is not the only issue that wealthy US citizens must grapple with, a specialist in the field told this publication.
By the end of this year, the US gift tax exemption will be reduced back down to $1 million from the $5 million that has been in force since 2010, which means would-be gift-makers have fewer than eight months to make any transfers, Beth Tractenberg, partner at Katten Muchin Rosenman in New York, said in an interview.
And with the presidential elections in November, any uncertainties over who will be in the White House next year could also encourage clients to adjust their affairs against any potential tax hikes, she said.
“You will see a major emphasis over the next eight months in planning for the additional $4 million of gift exemption. Some clients are just starting to think about additional gifting now and will need to act quickly. It is going to get very tight as we get closer to year-end and I am urging people to start acting now,” she said.
“Appraisals are needed, decisions have to be taken and documents drawn up,” she said.
She is not the first advisor to fire a warning about the gift tax exemption deadline. In April, DeYoe Wealth Management advised clients to start preparing immediately for the end of the Bush tax cuts. Wilmington Trust pointed out the need to seize wealth transfer opportunities this year. (To view an article on that issue, click here).