We are often asked the question “What is the best way to gift to my beneficiaries during my life?”
Easy Answer: Legacy Trusts.
A Legacy Trust is an irrevocable gifting trust established by the grantor (person who is making the gift) for the beneficiary and is funded while the grantor is alive.
Currently, (year 2022) an individual can gift $16,000 per year to as many people as they want. Husband and wife can combine this annual exemption and give $32,000. Also, everyone has the ability to gift up to $12,060,000 during their life time without paying a gift tax.
However, many people are hesitant to give money to their beneficiaries
for several reasons.
1. The beneficiary is minor
2. Concerns about funding a ne’er-do-well lifestyle
3. Drug or alcohol issues
4. Lack of experience handling money
5. Lawsuit, divorce or bankruptcy
6. Beneficiary has their own estate tax issues
The terms of the Legacy Trust can be as liberal or as restrictive as the grantor wants. Each trust can be tailored to each beneficiary giving the grantor piece of mind knowing that the money will be used to help that person but will not exacerbate any existing issues or create new ones.
Further, the assets in the Legacy Trust are protected from the claims of creditors, predators (lawsuits), divorcing spouses and are outside the taxable estate of both the grantor and beneficiary.
The grantor can transfer all types of assets to the trust such as cash, real estate, closely held business interests, stocks, bonds and other securities. These trusts have been used by some of America’s most thriving families such as the Rockefellers, Johnsons and DuPonts to pass wealth down to the next generation in the most prudent manner. You don’t have to be a Rockefeller to use the Legacy Trust but this is no “do-it-yourself” technique. The Legacy Trust is a complex strategy and must be drafted and implemented by an experienced estate planning attorney. Contact The Andersen Firm today or Book a Call with us to further discuss The Legacy Trust.
More about Gift Taxes can be found HERE