October 10, 2019
The IRS Issues Final Regulations for New Hardship Distribution Rules
Earlier this year, we discussed several changes to hardship distribution rules resulting from...
September 17, 2019
This is the second blog in a four-part series that focuses on estate planning strategies.
There are many reasons to make gifts to younger family members in trust for their benefit rather than outright. Some of the benefits include asset protection, tax planning, and family control. When creating a trust for many generations, one common strategy is a dynasty trust. A dynasty trust is any trust that lasts longer than one generation below the grantor’s generation. Dynasty trusts have two unique aspects that make them an attractive wealth transfer strategy.
Dynasty trusts take advantage of the federal generation-skipping transfer (GST) tax exemption ($11.4 million per individual in 2019) to remove family wealth from the transfer tax system for as long as the trust is in existence. These trusts are an effective use of the GST tax exemption for several reasons, including:
In most instances, when a trust is a grantor trust, the grantor and the trust are treated as the same taxpayer for income tax purposes but two separate entities for transfer tax purposes. This treatment requires the grantor to pay the trust’s income taxes and, therefore, adds a second layer of tax benefit to a Dynasty Trust due to a few key features, including:
Working with an estate planning attorney and Certified Public Accountant (CPA) is often helpful to determine whether this strategy is right for you and your family. For more information, visit our Lifetime Gift Planning resource page.
Theresa Marx is a senior wealth strategist for CIBC Private Wealth Management in Chicago, with 15 years of industry experience. In this role, she is responsible for developing integrated wealth management solutions and providing comprehensive estate and financial planning services to high net worth clients.
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