Trust gifts are commonly used to transfer wealth from one generation to the next by creating a trust fund.
As a general rule, the IRS taxes the value of the gift being transferred at the annual amount exempt from gift tax.
Trust gifts are a way to avoid taxes on gifts that exceed the annual gift tax exempt amount.
One type of trust giving is the Crummy trust, which allows gifts to be given for a specified period, recognizing gifts as current interests and subject to exemption from gift tax.
The disadvantage of a trust gift is that it is established without restrictions, allowing the beneficiary, such as a child, to withdraw large amounts, jeopardizing the financial viability of the fund.
AB trust is a joint trust created by a married couple; after the death of one of the spouses, the trust is divided into the survivor’s part (Trust A) and the bypass part (Decedent’s Trust or Trust B).
The agency, if necessary, allows any person or entity to act on behalf of another person when the beneficiary cannot explicitly give permission to do so.
A generation skip trust (GST) is a legally binding arrangement whereby assets are passed on to the grantor’s grandchildren or anyone 37.5 years younger, bypassing the grantor’s next generation of children.
Annuity preservation trusts (GRAT) are estate planning instruments in which the grantor freezes assets in a trust from which they receive an annual income.
A Health Care Power of Attorney (HCPA) is a legal document that gives a specific person the right to speak with others and make decisions on your behalf regarding your health, treatment, and care.