Planned Gifting

Planned gifting is an expansive term used to cover the many estate planning techniques that a high net worth person can engage in to transfer wealth to their heirs with minimal tax consequences. The range and type of planned gifting a donor may engage in will often depend upon the donor’s age, the types of assets owned, the basis of the donor’s assets, how responsible the beneficiaries are, whether the donor is charitably inclined, the donor’s citizenship, the amount of tax exemptions that the donor has available, and, of course, the wealth of the donor.

While any planned gifting strategy will surely make use of a donor’s ability to make annual exclusion gifts (also known as 2503(b) gifts), a knowledgeable tax attorney will also advise a donor about the benefits of structuring legitimate transactions so that they will also be eligible for valuation discounts, asset protection planning and dynastic planning. Some of the planned gifting services we offer at the Law Office of Kevin A. Pollock LLC include:

The second (and more common) type of trust is one in which a person creates a trust for the benefit of other people, usually the person’s heirs. This is known as a third party asset protection trust. Third party asset protection trusts are frequently created in conjunction with a client’s overall trust plan. Specifically, it is quite common to form a life insurance trust as an asset protection trust. There is usually no need to send third party asset protection trusts offshore as they are highly protected from creditors. However, a tax advantage may be had by creating them in another country.

Generally, in both types of trusts, money can only go to the beneficiaries at the discretion of the trustee. Additionally, the trustee must be an independent party. Beneficiaries have no (or limited) rights to take the trust money for themselves and they cannot assign their interest in the trust.

  • Advising clients on how to most effectively use their annual exclusion gifts and lifetime estate and gift tax exemptions.
  • Advising clients on the benefits of alternate gifting arrangements, such as directly paying for the educational and medical expenses of relatives.
  • Establishing a Family Limited Liability Company (FLLC) or a Family Limited Partnership (FLP)—For families that have significant wealth or complex dynamics, it is often advantageous to set up an FLLC or an FLP in order to better manage the assets while you are alive and after you pass away. Additionally, there are frequently incidental tax advantages in setting up these types of structures.
  • Creating private charitable foundations.
  • Creating public charitable foundations.
  • Drafting Grantor Retained Annuity Trusts (GRATs) and Grantor Retained UniTrusts (GRUTs)—When structured properly, a GRAT is an excellent way to make a low cost hedged bet. If the assets in the trust go up higher than expected, the wealth passes down to your heirs free of estate tax. If the assets underperform, they come back to you.
  • Drafting Charitable Trusts—Charitable Remainder Trusts (CRTs) and Charitable Lead Trusts (CLTs) can be wonderful tools for passing wealth down in a tax efficient manner while benefiting the charities that you care most about.
  • Other Trust Planning—including Irrevocable Life Insurance Trusts (ILITs)IRA Stretch Trusts, Qualified Personal Residence Trusts (QPRTs), Dynasty Trusts, Intentionally Defective Grantor Trusts, Offshore Trusts and Asset Protection Trusts.
  • Drafting Self-Canceling Installment Notes (SCINs).
  • Business Succession Planning—including corporate reorganizations to effectuate transfers of business interests into trusts for children.

For more information on Planned Gifting, please visit my blog: Kevin A. Pollock BLAWG