15 minute
telephone call

Schedule a complimentary 15 minute telephone call to discuss your planning needs.

Newsletter
New Blogs
LIFETIME GIFTING PROGRAM

A lifetime gifting program allows you to avoid gift, estateand generation-skipping transfer taxon transferred assets. Under the Internal Revenue, Code, you can transfer up to $13,000 per year,per person, to anyone without incurring gift tax or generation-skipping transfer tax. A marriedcouple can give twice that amount, or $26,000 per person, per year. With a lifetime givingprogram, you transfer this amount annually to the individuals of your choice, typically children,grandchildren and other close family members.

For example, if you give $13,000 per yearto two beneficiaries for five years, you will haveremoved nearly $1550,000 from your estate for estate tax purposes (assuming these assets wouldhave grown at 6%). After 10 years, you will have removed more than $365,000 and $1.5 millionafter 25 years.Not surprisingly, the amount removed from your estate is increased significantlywith each additional $13,000 beneficiary.

The value of the lifetime giving strategy is substantially enhanced when the transferred assets arediscounted in value. Lack of marketability and minority interest valuation discounts on thefamily limited liability company, established by a competent and experienced appraiser, allowyou to leverage the gifts so that larger transfers of assets may be made. Thus, a gift which wouldbelimited to $13,000 if made in cash increases to $21,667 if made with limited liability companyinterests at a 40% discount. Applying these discounts, a married couple will be able to transferapproximately $43,000 per beneficiary per year, or $430,000 over ten years, excluding growth.[Annual exclusion gifts can also be used to shield transfers to an irrevocable trust from gift andgeneration-skipping transfer tax. The beneficiary must have the right to withdraw up to $13,000of the transferred funds, but if that right is not exercised, the gifted funds can then be used topurchase life insurance on the life of the transferor or for other investments. This trust can be amultigenerational estate tax exempt trust or it can become a family “bank” for: (1)education; (2)business acquisitions; or (3) home purchases, among other things.

Medical care and tuition paid to assist family members or any other individual may be made inaddition to the annual exclusion gifts. As long as the gifts are made directly to the medicalfacility or educational institution, donors can exceed the $13,000 annual exclusion amountwithout imposition of gift taxes

SAMPLE PLANNING TOOLS

Family Limited Partnerships

Gift Trusts for Family Members

Lifetime Family Trusts

Grantor Retained Annuity Trust

Charitable Remainder Trust

Private Foundations

Sale to Grantor Trust

Beneficiary Defective Trust