Structuring trusts to permit the donor to act as trustee

Article Abstract:

Trust donors can act as trustees, but proper trust structuring is needed to minimize estate tax liability. Qualified personal residence trusts, grantor retained income trusts, and grantor retained annuity trusts allow lifetime gifts while retaining trusteeship. Third parties are preferable as trustees, but donors often wish to retain authority. Donors can be trustees of Section 2503(c), Crummey, and unified credit trusts, but retaining trusteeship of an insurance trust is not advisable if the donor is the insured. Donors may wish to make strategic use of the annual exclusion and unified credit gifts.

United States, Analysis, Planning, Trusts and trustees, Trustees, Trusts (Law), Grantor trusts

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Proposed legislation threatens unified credit

Article Abstract:

The proposed Long-Term Care Family Security Act of 1992 would provide tax-free long-term care insurance for all eligible persons and make accelerated tax benefits for the terminally ill tax free. However, the bill is financed through payroll and unearned income taxes as well as a 2/3 reduction in the unified credit for gift and estate taxes. The adverse tax consequences of this reduction from $192,800 to $54,800 are dramatic and therefore, the use of irrevocable life insurance trusts is essential if this law goes into effect to create tax-free dollars for future liquidity.

Transfer taxes, Long-term care of the sick, Long term care, Tax credits

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