August 2020

Irrevocable Life Insurance Trusts, or ILITs, have long been a staple of estate planning, helping individuals, families and business owners meet a wide range of goals. After all, the logic goes, with more of your money now shielded from federal estate taxes, you may no longer need to worry about having to pay estate taxes […]

Advantages of the incomplete non-grantor trust Avoiding A Completed Gift In order to avoid a completed gift and the potential gift tax consequences, i.e., the use of exclusion or payment of gift taxes, it is critical for the grantor to reserve sufficient power over the trust assets. Also, the place of administration of the trust

With New Jersey and New York being two of the higher income tax states (New Jersey’s top marginal rate is 10.75% and New York City residents face a top combined rate approaching 13%), an easy recommendation is for clients to go south.  A non-grantor trust is deemed a separate income tax entity—the trust pays its

How does a NIMCRUT differ from other charitable remainder trusts? Like other charitable remainder trusts, a NIMCRUT allows assets to build free from taxation. Generally, the older the donor and the lower the stated distribution rate from the trust, the greater the tax deduction. Is a NIMCRUT always irrevocable? Yes, a NIMCRUT is always irrevocable

You may find one especially advantageous if: You have invested the maximum in your qualified retirement plan for this year and want to put more money away in another tax-advantaged vehicle.You want a tax-favored vehicle that offers liquidity.You want to take advantage of tax-deferred compounding of investment gains.You want to avoid the potentially confiscatory taxation

A practical guide to NIMCRUTs NI = Net Income:Only trust income is paid by the unitrust.* You control the level of income distributed. M = Makeup provision:Amounts not paid due to lack of trust income can be made up in the future with income excesses.** CRUT = Charitable Remainder Unitrust:Additional contributions can be made at

ZEROED-OUT GRATA second alternative GRAT structure uses a zeroed-out, or Walton, GRAT. Section 7520 interest rate, the only cost to the grantor will have been the legal and administrative costs of setting up the GRAT. ZEROED-OUT GRAT WITH INCREASING PAYMENTSIt is possible to combine the previous strategies — a zeroed-out GRAT with increasing annuity payments.

The grantor can pass the right to receive any remaining annuity payments to his or her surviving spouse (either outright or through a marital trust) to qualify for the estate tax marital deduction, which could eliminate any estate tax liability relating to the GRAT assets. A properly structured GRAT will be treated as a grantor

Grantor retained annuity trusts (GRATs) ­represent an opportunity for a client to transfer appreciating assets to the next generation with little to no gift or estate tax consequences. 7520 interest rates are low, which is currently the case, but based on current interest rate trends, may not be for much longer. What is a GRAT?

As a continuation of our discussion into the Grantor Charitable Lead Trust, we will now turn our discussion towards the Non-Grantor Charitable Lead Trust. With a non-grantor charitable lead trust, the trust—and not the grantor—is considered the owner of the trust assets. However, this trust structure offers greater benefits for transfer tax purposes. Notably, both