Prepaying gift tax rather than waiting and paying estate tax can make sense in certain scenarios.

An example: A man has $6 million left, and his estate will be in a 55% tax bracket after 2010. If he waits until he dies and bequeaths the money, the net transfer is only $2.7 million. If instead in 2010 he makes a taxable gift, he can give $4.4 million-64% more-and pay the taxes with the rest; at a 35% rate, the gift tax would amount to $1.5 million. He must survive the gift by three years for the tax brackets to apply.

Don Weigandt, a wealth adviser in the Los Angeles office of J.P. Morgan Private Bank, said that "there is no question there is more discussion" now about gifting.

The appropriateness of the strategy depends on where you live, because of different rules in each state on gift and estate taxes. In New York, said Weigandt, it may make more sense to gift now than in California, where "people kind of roll their eyes at having to write a check for gift tax."

Wealth transfer techniques like grantor retained annuity trusts are popular alternatives to taxable gifts, and J.P. Morgan continues to talk to clients about them.

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