Potential Estate Tax Law Changes and the Completed Gift Trust Solution

Nov 9, 2020

We have been approached by a number of clients and/or their CPAs or financial advisors with the concern that the current huge exemption amounts (i.e., $11,580,000 gift/generation-skipping transfer/estate tax exemptions per person) may be reduced to somewhere between $3,500,00 to $6,000,000 under a Biden administration. Even under current law, these exemption amounts will be halved after 2025. Acting before such change in the law goes into effect (even acting this year for those who want to be safest) can easily save clients millions in potential estate and generation-skipping transfer taxes.

Clients are therefore looking into creating and funding, before year end, a Completed Gift Trust (CGT). The strategy is to transfer appreciating assets to a CGT so that assets can appreciate in value outside of the clients’ taxable estate using the current generous exemption amounts, so that such exemption amounts are permanently locked in through “grandfathering” (the IRS has declared they will allow such use of the exemption to stand, notwithstanding a later decrease in the exemption amounts).
We have clients who have set up trusts in which the clients are also a beneficiary. This can be done with a CGT and clients can choose to either be a beneficiary now (a little more aggressive) or become a beneficiary at a later date as determined by a protector (a more conservative approach).
The CGT can also be designed to take advantage of income tax rules so that the maximum deductions and more favorable tax brackets can be utilized (and in some cases, eliminating capital gain taxes).

If you have an interest in taking advantage of this advanced, highly-effective estate planning strategy, we encourage you to contact us at your earliest opportunity as we anticipate significant interest in the CGT strategy with a possible year-end deadline to act.

About Greenspoon Marder

Greenspoon Marder LLP is a full-service law firm with over 240 attorneys and more than 20 office locations across the United States. With operations from Miami to New York and from Denver to Los Angeles, our firm attracts some of the nation’s top talent in key markets and innovation hubs. Our core practice areas include Real Estate, Litigation, and Transactional Services, complemented by the capabilities of a full-service firm. Greenspoon Marder has upheld a spot on The American Lawyer’s Am Law 200 as one of the top law firms in the U.S. since 2015, and our goal is to provide exceptional client service by developing a thorough understanding of each client’s business needs and objectives in order to provide strategic, cost-effective solutions.

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This Greenspoon Marder LLP Client Alert is issued for informational purposes only and is not intended to be construed or used as general legal advice nor a solicitation of any type. Please contact the author(s) or your Greenspoon Marder LLP contact if you have any questions regarding the currency of this information. The hiring of a lawyer is an important decision. Before you decide, ask for written information about the lawyer’s legal qualifications and experience.

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Potential Estate Tax Law Changes and the Completed Gift Trust Solution

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