As featured in Estate Planning, a Thomson Reuters Publication, Vol. 51, No. 4, May 2024

OPTIMZED GIFT TRUSTS & FUNDING DESIGNS: CONSIDERATIONS AND SUGGESTIONS FOR CREATNG A GIFT TRUST WITH MAXIMUM FLEXIBILITY, ACCESS, USE, AND CONTROL WHILE MAINTAINING FAVORABLE TAX TREATMENT.

The golden age of federal estate tax minimization planning is upon us – but the window of opportunity is evaporating. The current legislative environment allows for most wealthy families to eliminate their 40% federal estate tax through a combination of tried-and-true gift planning strategies. To do so, however, families must gift large amounts of wealth out of their estates in order to lock-in their federal gift exemptions and “grandfather” their gift trusts in advance of anticipated tax, economic, and legislative changes (most notably, January 1, 2026, when federal gift exemptions are scheduled to be cut in half).

This article (i) briefly explains the anticipated changes in the economic and legislative landscape, (ii) details the benefits and terms of an “optimized” gift trust (that is, a trust with modern, state-of-the-art features that maximize the donor’s flexibility, access, use, and control over the assets transferred to the trust, with minimal audit risk), (iii) details “funding design” guidelines for determining the ideal amount of assets and best method of transferring assets to the gift trust, and (iv) illustrates three different funding designs using a case study approach.

Read the full article here.