1 gifts n generosity / personal motives n estate reduction n income shifting (‘86 act) n income...
TRANSCRIPT
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Gifts
Generosity / personal motives estate reduction income shifting (‘86 Act) income tax deduction (charity) issue of control
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Gift
1. Property lawdonative intentdelivery
2. Income taxdetached and disinterested
generosity
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Gift (cont.)
3. Gift tax less than adequate consideration in
money or money’s worthdirect / indirectpart gift / part salebasis issues
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Indirect Gift
Mom & Dad50% stock$1,500,000
FAMCO
Daughter50% stock$1,500,000
FAMCO redeems Mom & Dad’s stock for cash and notes totaling $1,000,000.
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2503 Taxable Gifts
(a) total amount of gifts
(b) annual exclusionpresent interest rule$10,000 / donee inflation adjustment
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2503 Taxable Gifts (cont.)
(c) transfer for minor control issue present interest if
by or for benefitno substantial restrictionpass at age 21estate or GPA if death
UGMA / UTMA
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2503 Taxable Gifts (cont.)
(e) educational / medical exclusionqualified transferto provider
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2503 Taxable Gifts (cont.)
2513 - split gift electionspouse one halfconsentall
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Trusts
Legal title
v.
Beneficial ownership (equitable)
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Trusts
A) Expressprivatepublic inter vivostestamentaryactivepassive / stand by
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Trusts
A) Settlor, trustor, grantor
B) Trustee
C) Beneficiary
D) Capacity
E) Intentcy pres
F) Res
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Trusts
Issues of Income and Principal Accumulation trust Discretionary trust Ascertainable standard provision Income trust Annuity trust Total return unitrust Sprinkle trust
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Trusts
Asset ProtectionControlWealth transfer isuesPerpetuities
Asset ManagementTax SavingsSpend Thrift Provisions
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Trusts
Asset Protection (cont.)Alaska and Delaware TrustsOffshore TrustsSpecial Needs Trusts
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Trusts
Trusts as a Separate Taxable Entity
Estate TrustBene
IndividualBene’s
IndividualBene’s
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Life Estate
A to B for lifereversionper autre vieterm of yearssuccessive terms and Rule Against
Perpetuitiesremainder
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Remainder
a. vested
A to B for life, remainder to C.
b. contingent
A to B for life, remainder to C if then living.
A to B for life, remainder to C if attains age 35, if not, to D.
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Crummey Powers
demand right judicial historyIRS resistance
usesILIT2503 (c) window2503 (b) trust
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Crummey Powers (cont.)
$70,000 / year
2 daughters: Crummey +
½ inc.; ½ rem 5 grandchildren: Crummey +
contingent interests
Trust