Dynasty trusts: sheltering descendants from transfer taxes
Article Abstract:
Dynasty trusts provide individuals with the opportunity to transfer significant amounts of wealth to subsequent generations by making full use of the $1 million generation-skipping transfer tax exemption. The duration that dynasty trusts can exist depends on whether the jurisdiction in which the trust is formed follows the common law rule against perpetuities, the uniform law or has abolished the rule. When the trust ends, the distribution is not subject to transfer taxes. Transfer tax liability only occurs when the beneficiaries die or transfer the property.
Publication Name: Estate Planning
Subject: Law
ISSN: 0094-1794
Year: 1996
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Structuring GRATs under the Section 7520 regulations
Article Abstract:
The final Section 7520 Regulations require that annuities retained by a grantor of a GRAT pass a new 'probability of exhaustion test,' which most computer programs do not calculate. The requirement's validity is dubious, as it directly challenges the Tax Court decision in 'Estate of Shapiro,' but challenging it and losing would result in application of a 'special annuity factor' to value the annuity. The test requires a modest reduction in the annuity percentage, resulting in a higher taxable gift value.
Publication Name: Estate Planning
Subject: Law
ISSN: 0094-1794
Year: 1997
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Effective postmortem reformation of a client's estate plan
Article Abstract:
Estate planners should be aware of the value of postmortem planning and estate plan error correction in reducing estate tax liability. Money-saving corrections and modifications include division of trusts, charitable remainder and lead trusts' reformation, reverse qualified terminable interest property elections, trust combinations, and disclaimers. In particular, disclaimers can reduce estate, gift and generation-skipping transfer taxes despite improper estate planning prior to testator's death.
Publication Name: Estate Planning
Subject: Law
ISSN: 0094-1794
Year: 1996
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