By Timothy J. Belber, JD on December 22, 2011

A common theme from 2011 is “fewer people are taking advantage of the increased exemption than expected”. This despite, as Blanche Lark Christerson of Deutsche Bank says in SmartMoney (13 December 2011):

“Considering that the gift tax exclusion had been frozen at $1 million for many years this increase represents a remarkable opportunity to pass property to heirs free of gift tax.”

So why so relatively little implementation?

The problem may be that all the talk is around the technical/tax/quantitative benefits and not what can be accomplished for the human beneficiaries of the gift. In the end, it is a gift, and as such the conversation should begin with what can be accomplished by making such a gift. Will it be transformative in the lives of future generations of the family? What will it be used to accomplish? Education? Opportunities? Community/Philanthropic causes?

Clients are bombarded with the latest tax and financial ideas on a regular basis. The arguments about tax policy and rates create an overwhelming amount of noise which can drown out the real opportunity. The opportunity to do something with this “once in a lifetime gifting opportunity” that can create lasting, sustainable and empowering benefits for multiple generations.

Simon Sinek, author of “Start with Why” gave this TED Talk, http://www.ted.com/talks/simon_sinek_how_great_leaders_inspire_action.html. Using what he refers to as “The Golden Circle”, he demonstrates how focusing on the Why of doing rather than on How or What of doing changes everything. Helping clients discover a powerful “Why” for using the increased exemption amount is not only a better conversation but the one with the most potential for a real result.

What do you think?
tbelber@themadisongroup.com

Next Time: Six Things from 2011 that matter in 2012