Gifting Wealth and the Estate Tax Law Under Trump

It is by now well known that President Trump’s Tax Cuts and Jobs Act doubled the gift and estate tax exemptions to about $11.2 million for 2018, and $22.4 million for each married couple, with some basic portability techniques. However, this is just temporary: the amounts will revert to pre-passage amounts after adjusting for inflation.

To take advantage of the temporary increase for gifting, wealthy citizens and business owners have quite a few options.

1. “Make gifts of public or private stock each year to your children and grandchildren without limiting your corporate powers. Use an entity such as an LLC to own assets and give “member interests” of ownership to your loved ones but maintain control with your LLC operating agreement.
2. If you are with a company that is quickly appreciating in stock value, you may set up trusts to own the stock on behalf of children and grandchildren.
3. Fully funding accounts and trusts for disabled children with special needs.
4. Since you can transfer large amounts of assets under the new law, the use of trust documents can be wonderful in that they can protect children and grandchildren for a lifetime. Example: You can elect to have a trust give 1/3rd to a child at 30 years old, another 1/3rd at 50 and another 1/3^rd at 60 years old while also allowing for education, health and welfare payments to be made to loved ones by trust officers.
5. Trusts are only good if they are funded. Thus, the new law allows for a lot of money to fund trusts for spouses, children, and extended families. But, the law could change one day in the future.
6. Of course, you can strategically fund 529 educational plans for many children and grandchildren without gift tax implications.
7. You could also fund various types of insurance trusts for both yourself and your loved ones or even a dynasty trust.
8. A wealthy person could help buy homes for their children.
9. An owner can diversify by gifting their holdings in land, small business stock, or mineral rights.
10. As for retirement, a wealthy donor could fund retirement products or loved ones such as an annuity or single premium variable life product. Funding a permanent insurance product for a child would actually protect the child and their children.”

See George Mentz, Gifting Wealth and the Estate Tax Law Under Trump, News Max Finance, June 20, 2018.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.