1

Gifts

Generosity / personal motives estate reduction income shifting (‘86 Act) income tax deduction (charity) issue of control

2

Gift

1. Property lawdonative intentdelivery

2. Income taxdetached and disinterested

generosity

3

Gift (cont.)

3. Gift tax less than adequate consideration in

money or money’s worthdirect / indirectpart gift / part salebasis issues

4

Indirect Gift

Mom & Dad50% stock$1,500,000

FAMCO

Daughter50% stock$1,500,000

FAMCO redeems Mom & Dad’s stock for cash and notes totaling $1,000,000.

5

2503 Taxable Gifts

(a) total amount of gifts

(b) annual exclusionpresent interest rule$10,000 / donee inflation adjustment

6

2503 Taxable Gifts (cont.)

(c) transfer for minor control issue present interest if

by or for benefitno substantial restrictionpass at age 21estate or GPA if death

UGMA / UTMA

7

2503 Taxable Gifts (cont.)

(e) educational / medical exclusionqualified transferto provider

8

2503 Taxable Gifts (cont.)

2513 - split gift electionspouse one halfconsentall

9

Trusts

Legal title

v.

Beneficial ownership (equitable)

10

Trusts

A) Expressprivatepublic inter vivostestamentaryactivepassive / stand by

11

Trusts

A) Settlor, trustor, grantor

B) Trustee

C) Beneficiary

D) Capacity

E) Intentcy pres

F) Res

12

Trusts

Issues of Income and Principal Accumulation trust Discretionary trust Ascertainable standard provision Income trust Annuity trust Total return unitrust Sprinkle trust

13

Trusts

Asset ProtectionControlWealth transfer isuesPerpetuities

Asset ManagementTax SavingsSpend Thrift Provisions

14

Trusts

Asset Protection (cont.)Alaska and Delaware TrustsOffshore TrustsSpecial Needs Trusts

15

Trusts

Trusts as a Separate Taxable Entity

Estate TrustBene

IndividualBene’s

IndividualBene’s

16

Life Estate

A to B for lifereversionper autre vieterm of yearssuccessive terms and Rule Against

Perpetuitiesremainder

17

Remainder

a. vested

A to B for life, remainder to C.

b. contingent

A to B for life, remainder to C if then living.

A to B for life, remainder to C if attains age 35, if not, to D.

18

Crummey Powers

demand right judicial historyIRS resistance

usesILIT2503 (c) window2503 (b) trust

19

Crummey Powers (cont.)

$70,000 / year

2 daughters: Crummey +

½ inc.; ½ rem 5 grandchildren: Crummey +

contingent interests

Trust