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Posted by kastnna on March 10, 2007, 2:11 am
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If a single grantor wishes to make his maximum annual gift
to a trust that has two beneficiaries what is the maximum he
can currently gift (ignore the lifetime excusion amount for
now)?
Is it $12,000 (1 entity/Trust) or $24,000 ($12k x 2
beneficiaries)?
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Posted by Herb Smith on March 11, 2007, 3:50 am
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> If a single grantor wishes to make his maximum annual gift
> to a trust that has two beneficiaries what is the maximum he
> can currently gift (ignore the lifetime excusion amount for
> now)?
>
> Is it $12,000 (1 entity/Trust) or $24,000 ($12k x 2
> beneficiaries)?
I believe it is $0, as gifts to a trust are NOT gifts to a
natural person. A gift tax return (709) would be required
for any amount "gifted" to the trust; no annual exclusion
would apply.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Stuart A. Bronstein on March 11, 2007, 3:50 am
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> If a single grantor wishes to make his maximum annual gift
> to a trust that has two beneficiaries what is the maximum he
> can currently gift (ignore the lifetime excusion amount for
> now)?
>
> Is it $12,000 (1 entity/Trust) or $24,000 ($12k x 2
> beneficiaries)?
Unless the trusts are set up for this precise purpose, gifts
to trusts are not eligible for the exemption. So the answer
is likely to be $0.
Stu
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by kastnna on March 13, 2007, 6:26 pm
Please log in for more thread options Sorry for the lack of clarity. I am referring to Irrevocable
Life Insurance Trusts (ILITs) that have a "Crummey
Provision" in them. The usual process is that the grantor
makes a gift to the trust for the beneficiary. A crummey
letter(s) is sent offering the beneficiaries the gift. The
benes decline the offer and the gift is used to pay an
insurance premium.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Stuart A. Bronstein on March 14, 2007, 12:03 am
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> Sorry for the lack of clarity. I am referring to Irrevocable
> Life Insurance Trusts (ILITs) that have a "Crummey
> Provision" in them. The usual process is that the grantor
> makes a gift to the trust for the beneficiary. A crummey
> letter(s) is sent offering the beneficiaries the gift. The
> benes decline the offer and the gift is used to pay an
> insurance premium.
Ok, thanks for the clarification.
Depending on how the trust is drafted, for a Crummey trust
with two beneficiaries the exempt amount could be $24,000,
but it could also be $5,000 or $10,000.
The reason is that the beneficiaries' failures to withdraw
the gifts within the time provided are considered taxable
gifts if they exceed either $5,000 or 5% of the assets out
of which the money could have been taken.
In general if the trust is drafted so that anything in the
trust will belong to those particular beneficiaries in any
event (e.g. will go to their estates if they die or they can
designate who the money goes to under some circumstances),
the gifts will be considered to be from the beneficiaries to
themselves, which is not a taxable event.
But if there are any restrictions - they can't designate who
gets the property when they die or if they have a special
power of appointment rather than a general one - they are
not considered the ultimate beneficiaries, and the limit is
$5,000 each, or perhaps for the two, depending on how the
trust is drafted.
Stu
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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