Many high-net-worth individuals have been taking a "wait-and-see" approach to 2012 gifting. The lifetime gift and generation skipping transfer (GST) tax exemptions are both currently set at $5.12 million, providing a tremendous opportunity to shift current wealth and future appreciation out of an individual's estate. With both exemptions set to revert back to $1 million  on January 1 (but indexed for inflation from 2001), time is running out on a potential once-in-a-lifetime gifting opportunity.

Tax planning should be based on an individual's personal situation and should always be discussed with her team of advisors to determine the best course of action. That being said, the following are some opportunities to consider:
  Make a gift of highly appreciable property to grandchildren or a dynasty trust. This shifts the wealth and future appreciation out of the original owner's estate and that of their children's estate through the allocation of the donor's GST exemption to the gift.
  Consider a gift of a second home or vacation property or fractional interests therein that may be eligible for valuation discounts.
  Consider making a gift with your spouse of up to $10.24 million by gifting interests in a family limited partnership that may be eligible for discounts based on lack of marketability and minority interests.  
  Purchase life insurance through an irrevocable life insurance trust.

Some additional "traditional" gifting strategies that can really add up include:
  Unlimited payments for qualified medical and education expenses made directly to the provider are not considered gifts.
  An individual can make up to $13,000 annual exclusion gifts in 2012 ($14,000 in 2013) to as many people as they like without it being considered a taxable gift.

Keep track of all gifts made during the year, and make year-end gifts in time for the individual to deposit the money or take ownership before December 31 to prove that a complete gift was made.

Whatever happens in the coming months with regard to income, estate, and gift taxes, chances are the 2012 gift and GST tax exemptions are at an all time high. Act quickly but with guidance from professional advisors.

Laura K. Barooshian, CPA, and Stephen Colella, CPA, advise high-net-worth individuals and family groups at DiCicco, Gulman & Company, a Woburn, Mass.-based CPA and business consulting firm. Visit www.dgccpa.com to learn more.