In the last few weeks we have featured several blogs in this space about the changes to the gift and estate tax regimes and how they can affect your estate planning decisions. A recent Wall Street Journal article addresses some compelling opportunities for small business owners to take advantage of the increased gift tax exemption amount that is in force for 2011 and 2012.

Basically, the column highlights the opportunity to transfer a significant amount of business assets to the next generation without getting dinged by the gift tax. Prior to the tax change at the end of last year the gift tax exemption was only $1 million, for the remainder of this year and next year that cap is raised to $5 million for individuals and $10 million for couples.

In the Journal article a partner from PricewaterhouseCoopers describes this as "golden opportunity to move wealth at no tax cost." He also indicates that gifts below the exemption amount not only avoid the gift tax but also shield future appreciation from taxes.

There are a number of ways to incorporate this potentially temporary gift tax exemption amount into a comprehensive estate plan. Trusts and life insurance policies can complement the amounts that passed by gift to help avoid unnecessary tax implications.

The article also looks at methods to use the gift tax exemption to help fund retirement. One example from the article involves transferring the business while maintaining ownership of the property so that the owner could continue to receive income from rents.

Source: Wall Street Journal "Family Businesses Catch a Big Break" Anne Tergesen, February 19, 2011