As you may know, the U.S. Congress Joint Select Committee on Deficit Reduction (the "Super Committee") is scheduled to announce its proposals on November 23, 2011. Reports suggest that the proposals may include changes in the current estate, gift and generation-skipping transfer tax laws. In particular, you may be hearing rumors of concerns that the federal gift tax exemption could be reduced from the current $5 million to $1 million, possibly as early as the announcement date.

These rumors, as well as others predicting changes that would adversely affect highly effective gifting techniques such as Grantor Retained Annuity Trusts ("GRATs") have been floating around for quite a number of months now. From what we can tell, these rumors have become more widespread in the last several weeks not because of anything anyone in Washington has said, but because more and more professionals are spreading the rumors. While recent experience suggests that almost any tax law changes are possible, there is no concrete evidence that this is a priority agenda item for the Super Committee or Congress. In particular the revenue impact of any such changes would be very small and tax administration costs would be increased significantly. That suggests that even if there are changes, they would be effective no sooner than January 1.

That said, if you have not fully utilized your $5 million lifetime gift exemption, desire to use some or all of it, and are concerned that the exemption may be reduced, we would be pleased to assist you with making those gifts. In addition, while many of you may be suffering from message fatigue, we must remind everyone that the current economic and tax law environment, especially IRS interest rate tables, truly have never been more favorable for gifting techniques such as GRATs. So regardless of your views about possible legislative change, now is a terrific time to act if those techniques are of interest to you.