Did you know that there's a wealth-transfer technique you can
use to reduce your taxable estate and keep more of your assets for your heirs?
You can make annual gifts of up to $13,000 ($26,000 per married couple) to as
many people as you wish without incurring federal gift taxes.

An example: A married couple with three children could reduce
their estate by $78,000 each year if $26,000 were given to each of their
children.

Gifting can be used in a number of unique ways. You can use
annual gifts to help build a college fund for a child, grandchild, relative, or
even a friend -- by contributing to a 529 plan account, a Coverdell Education
Savings Account, or a UGMA/UGTA account. In fact, 529 plans have special rules
that allow you to make five years' worth of contributions in one year without
incurring any gift taxes -- that's $65,000 for individuals and $130,000 for
married couples!

Gifts can also be used to build wealth for future generations
as well as help a child, relative, or friend fund a down payment on a home, buy
a car, or start a business. Your financial advisor can help you determine how
annual gifts might fit into your overall financial plan.

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January 2012 — This column is provided through the Financial
Planning Association, the membership organization for the financial planning
community, and is brought to you by Ronald J VanSurksum, CFP®, a local member
of FPA.

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