The fiscal cliff has some Americans so scared that they are rushing to move their money to other places to keep it safe. Some analysts think moves like this could be problematic for some.
Currently, the estate and gift tax is 35 percent on all gifts ranging
from $1 million to $5.12 million. Gifts above that amount aren’t taxed. If the government decides to let the current exemptions expire then the tax rate will spike to 55 percent, and upper middle class, wealthy — and retirees aren’t about that life.“It’s crazy,” Richard Behrendt, Director of Estate Planning for Baird’s Private Wealth Management told CNN Money. “I bet more wealth is transferred this year than in the past 10 years combined.”
Other analysts predict that more wealth will be given away or redistributed three to four times than it ever has been in previous years.
It’s a gamble though, deciding what stays and goes means having to guess how the markets will turn out. Gifting a hot stock may cause the estate to pay less taxes than say giving away a real estate holding, but if and when the housing market resurges, it could be a great boon for the recipient.
There is hope for those who have invested wisely and fear that taxes will eat a large chunk of what they’ve saved. CNN Money has more on ways to make the tax hike work for you.