The 'double-skip' trust: a valuable GST tax planning tool

Article Abstract:

Very wealthy families may benefit from the use of double-skip gifts, in which great-grandchildren are made annual beneficiaries of gifts in order to distribute wealth. Skipped generations are not taxed, the gift tax is lower than estate taxes for lifetime transfers, and the generation skipping tax is calculated on a tax-exclusive basis, making double-skip gifts more desirable for families who are likely to be in high tax brackets for a few generation. Such schemes can even be structured so that the skipped generation has access to some funds.

Transfer taxes, Generation-skipping transfer tax

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Qualified personal residence trusts yield tax savings

Article Abstract:

The qualified personal residence trust (QPRT) provides taxpayers with a means to discount the estate tax value of gifts, but such tax benefits should be weighed against lost capital gains step-up and mortality risks. The benefits of the QPRT, and all grantor retained income trusts, are lost if the grantor dies during the income term because the trust assets will be included in the estate. The QPRT does allow the grantor to hold both the residence and cash to pay expenses related to the residence in the trust.

Taxation, Grantor trusts

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Fiduciary investments: drafting for nonconformity

Article Abstract:

Estate planners have various approaches to draft fiduciary investment documents not in conformity with the Prudent Investor Rule. This rule may be inappropriate for some situations, as with life insurance trusts or family businesses where diversification is not desired. Sample paragraphs are presented for those two cases and also addressing conflict of interest. General principles of drafting and alternatives are also discussed.

Investments

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