Gifting Techniques for 2021

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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 additional estate planning methods to maximize wealth transfer between generations.

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Burner Law Group, P.C.

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