The disclaimer-activated generation-skipping trust: a useful strategy

Article Abstract:

Disclaimer-activated generation-skipping trusts provide greater flexibility than regular generation-skipping trusts and can be used in a wider variety of situations. Such trusts are not originally generation-skipping, but can be made so long after the original donee has died. Such trusts should be structured as bequests to children, who are given power of appointment and principal invasion power. If the child decides to disclaim the power of appointment while retaining other rights, the trust effectively becomes a generation-skipper.

Generation-skipping trusts

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Strategies after TRA '97 for clients with highly appreciated stock

Article Abstract:

Holding onto a single highly appreciated stock may be too risky under the Taxpayer Relief Act of 1997 (TRA) when it is the main asset in an estate. The risk of holding must be balanced against the tax consequences of sale, gift, or testamentary disposition. New IRS section 1259 makes selling the stock short-against-the-box more complicated and less attractive. However, TRA reduced the capital gains tax rate on long-term stock to 20%, making immediate sale more attractive.

Methods, Taxation, Portfolio management, Securities, Risk management, Securities taxes

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