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​Annual Gift Program and Post-Mortem Planning Including Prior Tax Credit

An existing husband-and-wife client contacted us about methods to reduce the value of their taxable estates. Our team discussed the benefits of having the property appraised and gifting fractional interests in the property to their sole heir, their son, which they did over a period of years, which substantially reduced the value of the property in their estates at the time of their deaths. When the wife died after an illness and her husband unexpectedly died a few months later, we extended filing the wife's federal estate tax return, paying with the extension an amount calculated to maximize the use of the prior tax credit in the husband's estate. This strategy resulted in a tax savings to the son of approximately $500,000, which was in addition to the tax benefits resulting from the minority interest valuation available for the balance of the real estate that was the subject of the gift program.