Chicago Estate Planning and the $5 Million Gift Tax Exemption

As Kelly Greene points out in her recent article in the Wall Street Journal, families are looking to take advantage of the $5 million gift tax exemption which will expire at the end of the year, but at the same time they are worried that they will change their minds down the road or will need to get the money back from the irrevocable trust they are creating to take advantage of the gift tax exemption.

One way to make a trust more flexible is to designate a Trust Protector. This is an individual, often a relative, who oversees the Trustee of the Trust. The Trust Protector can remove a beneficiary, veto a distribution, move the trust to another state with more favorable tax laws or amend the Trust’s terms.

Ms. Greene goes on to point out the importance of designating the Trust as a Grantor Trust so the donor pays any income tax or capital-gains tax owed on the assets each year so those payments are not considered additional gifts. The payment of the tax is not considered a gift there is a legal obligation to pay it.

Consult your estate planning attorney for further information.

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