Gifting Techniques for 2021


The 2017 Tax Cuts and Jobs Act (TCJA)  doubled the estate tax exemption, which in 2021 is $11.7 million dollars. This exemption is set sunset in 2026, but due to the economy, it may substantially decrease as early as 2021 or 2022 to pre-2017 levels, adjusted for inflation.

Some gifting techniques you may want to discuss with an estate planning attorney:

        • Direct Gifts of assets.
        • Annual exclusion gifts, including $15,000 per recipient, medical and tuition gifts.
        • Setting up an irrevocable life insurance trust (ILIT) to provide an inheritance for your descendants and minimizing estate taxes.
        • Making a gift and/or sale to an Intentionally Defective Grantor Trust. The latter allows you to remove assets from your estate while maintaining an income stream.
        • Using valuation discounts to transfer business interests.
        • Creating a Grantor Retained Annuity Trust (GRAT) to remove assets out of your estate. The grantor gifts assets to an irrevocable trust and retains the right to an annuity for a specific term of years (not to exceed). At the end of the stated term of years, the remaining assets transfer to a trust for beneficiaries. Since you receive an annuity, the initial gift is either discounted or “zeroed out” thereby not counting toward your lifetime exemption amount.
        • Establishing a Spousal Lifetime Access Trust (SLAT) – a trust which transfers a married person’s assets out of the couple’s estate yet allows the non-transferor spouse to be a lifetime beneficiary of the trust.

These are only a few techniques that could help you and your family capture the high federal estate tax exemption. We are happy to discuss estate planning methods to maximize wealth transfer between generations.

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Burner Law Group, P.C.

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