With the reunification of gift and estate tax tables starting in 2011, it might be worthwhile to make gifts at the new $5 Million levels before Congress reduces it. With gift splitting, this means that a married couple could give up to $10 Million to the next generations. The issues: (1) What if they lower the exclusion rate after 2012 to say $2.5 Million and the couple dies in say 2013. Does that mean that the $5 Million already given away is now subject to estate taxes? Under the strict language of the Code that’s a possible conclusion. But what if Mom and Pop’s assets are below the amount of the Tax can the IRS go after the assets given away? That’s more complicated. That goes into the issue of transferee liability. If you receive something subject to a transfer tax and that tax isn’t paid, normally the tax follows the asset. But in this case, the gift tax was paid by the unified credit exclusion and just because that exclusion changed does not make that asset a transferred asset in my view. However, it is something to be concerned about. As we near the end of 2012, it may very well be good to go ahead and make gifts. (2) Liquidity. Ma and Pa may want to limit gifts to ensure liquidity to them. And the only gifts that will work are outright gifts without any retained ownership of them. (You can make gifts in trust for other people, just not yourself-if you did, keep the beneficial interest it would trigger an estate tax on your death). So, folks need to plan what their needs will be long term before such a gift. (3) Vermont residents may be some gift tax issues. So, check with your local attorneys to be sure that you are not running afoul of a state gift tax liability.