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What type of trust or entity allows an individual to take advantage of the $5 Million dollar gift tax exemption?

Minneapolis, MN |

while permitting the grantor to have the ability to control (withdraw funds) the trust?

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Attorney answers 1


What you are hoping to accomplish required an advanced level of planning from a knowledgeable and experienced estate planning attorney. This is because you’re trying to make a gift with “strings attached,” also known as a “retained interest.” The IRS considers such gifts to be “incomplete gifts” and as a result the transferred property is drawn back into the donor’s estate for estate tax purposes.

However, there are strategies involving a combination of irrevocable trusts and LLCs (or other entities) that allow you to transfer assets into an entity that you control and then gift interests in the entity to the irrevocable trusts for your beneficiaries. Please keep in mind that the assets will need to be valued by a qualified appraiser, the amount gifted will need to be reported to the IRS on a Gift Tax Return Form 709 (, and the appraisal report will need to be attached to the Gift Tax Return.

I also need to caution you that any attempt to circumvent the Internal Revenue Code will be highly scrutinized and the transactions could be overturned by the IRS. As I said before, this is an advanced area of tax law that should only be undertaken with the counsel of knowledgeable and experienced estate planning attorney, and even then, there are no guarantees.

See Internal Revenue Code Sections 2501 et seq regarding imposition of gift tax.

This answer is provided by tax and estate planning attorney Stephanie D. Winstead. Mrs. Winstead is licensed to practice law in the State of California ONLY and she maintains offices in Laguna Niguel, California and Carlsbad, California.. This answer DOES NOT create an attorney-client relationship, and is only intended to provide general advice within the limits of the question asked. If you wish to create an attorney-client relationship for specific legal advice, it will be necessary to enter into an engagement for legal services. More general legal information about wills, living trusts, and estate planning can be found at Mrs. Winstead’s website at www.WinsteadLaw.Net.

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