Time is short. The compromise on the gift, estate and generation skipping tax law passed by Congress on Dec. 17, 2010, provides federal tax largesse — an unprecedented two-year opportunity to make tax-free lifetime farm wealth transfers.

Because of misconception and uncertainty, many are waiting and pondering. Run to your CPA, tax and estate planning attorney and other trusted advisors now.

There are opportunities to consider in passing the family farm down to the next generation.

Before the end of 2012, you and your spouse may transfer farm assets up to $10 million (reduced by any taxable previous gifts) to your children or even grandchildren. Such transfers to the next generation are estate, gift and generation skipping tax-free, relieving the burden of paying significant estate taxes for the next generation of farmers, who may be asset rich but cash poor.

Additionally, giving farm assets now removes future appreciation in the farm assets from being taxable in your estate. Assume a farm consists of several acres of land valued at $5 million. If the land appreciates at a rate of 5 percent for the next 20 years, the land will be worth about $13 million. By giving the farmland within the two-year window ending Dec. 31, 2012, the additional $8 million in appreciation is protected from estate tax in the future.

(It is unclear whether Congress may “claw back” gifts after 2012 in a year where the estate tax exemption is less than $5 million. For example, if a farmer gives $5 million in 2011 and subsequently dies in a year in which the estate tax exemption is only $1 million, then estate tax could be due on the $4 million of the previously non-taxable gift. However, tax commentators believe it is unlikely that appreciation of the gifted property would be subject to estate tax from a “claw back”.)

You also locked in the benefits of the generous current lifetime gift tax exemption of $5 million (which reverts to $1 million in 2013). You can choose anyone to be your gift recipient.

In addition to transferring $5 million tax free, or $10 million for a farmer and spouse combined, you may make as many gifts as you desire as long as no one person gets more than $13,000 of value in any one year. If spouses use the split gift election, then the annual gift may be up to $26,000.

If you live in a state that has a state inheritance or estate tax, you could save state inheritance or estate taxes by getting these assets out of your estate before your death since only two states, Connecticut and Tennessee, impose gift taxes.

Trusts are effective tools, which can be used to properly structure gifts and generate additional economic benefits. If your gift recipient is a person who needs protection from creditors or divorcing spouses, you could give the farm into an irrevocable trust with a spendthrift provision and provide to your recipient proven protection.

If handled properly, a farm transferred into a grantor trust is not includable in your estate for estate tax purposes and the annual income tax is paid by you allowing the trust to grow faster for the beneficiaries of the trust. Also, by paying the income taxes earned by the farm in the trust, you are reducing your own estate subject to estate tax.