Irrevocable trust

[Anonymous]

Anonymous wrote:

Anonymous wrote:Op,

How much money do you have?
$14m? Then you have enough to talk to an estate attorney.

Actually if it's a couple and they have 2 children, they can each gift up to $13 million to each child before triggering gift/estate taxes. So it would take $52 million to be relevant.

A few states do have estate taxes, though.

Nice try, but you cannot gift $13m to EACH kid.

You are thinking about the yearly gift allowance. Where you can gift $18K to each family member (or anyone) and each spouse can do it. So if you have 2 kids, each are married, then you can gift $36K to each kid and $36K to their spouses. ($144K), And the same $36K to each grandkid

That is what we do already. Simple way to spend down while alive, and let the kids/grandkids use it when it matters most (20/30s for kids and the GK from birth onwards---knowing their 529s will be fully funded for $90K college currently)

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Op,

How much money do you have?
$14m? Then you have enough to talk to an estate attorney.

Actually if it's a couple and they have 2 children, they can each gift up to $13 million to each child before triggering gift/estate taxes. So it would take $52 million to be relevant.

A few states do have estate taxes, though.

Nice try, but you cannot gift $13m to EACH kid.

You are thinking about the yearly gift allowance. Where you can gift $18K to each family member (or anyone) and each spouse can do it. So if you have 2 kids, each are married, then you can gift $36K to each kid and $36K to their spouses. ($144K), And the same $36K to each grandkid

That is what we do already. Simple way to spend down while alive, and let the kids/grandkids use it when it matters most (20/30s for kids and the GK from birth onwards---knowing their 529s will be fully funded for $90K college currently)

Hit return too soon.
The $13M is what you each can currently gift in Total upon death without triggering the estate tax at federal level (state levels may apply at lower amounts or not at all).

[Anonymous]

Anonymous wrote:

Anonymous wrote:Op,

How much money do you have?
$14m? Then you have enough to talk to an estate attorney.

Actually if it's a couple and they have 2 children, they can each gift up to $13 million to each child before triggering gift/estate taxes. So it would take $52 million to be relevant.

A few states do have estate taxes, though.

Wrong. The lifetime exemption for an individual is north of $13 million. If I have one child or three I can only put in $13.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Op,

How much money do you have?
$14m? Then you have enough to talk to an estate attorney.

Actually if it's a couple and they have 2 children, they can each gift up to $13 million to each child before triggering gift/estate taxes. So it would take $52 million to be relevant.

A few states do have estate taxes, though.

Nice try, but you cannot gift $13m to EACH kid.

You are thinking about the yearly gift allowance. Where you can gift $18K to each family member (or anyone) and each spouse can do it. So if you have 2 kids, each are married, then you can gift $36K to each kid and $36K to their spouses. ($144K), And the same $36K to each grandkid

That is what we do already. Simple way to spend down while alive, and let the kids/grandkids use it when it matters most (20/30s for kids and the GK from birth onwards---knowing their 529s will be fully funded for $90K college currently)

PP was correct, except the unified estate/gift exemption amount is $13.61 million in 2024, to be precise. You can gift that much to your children now (per spouse per child). All it would trigger is a filing reporting the gift (no tax) and that amount would be credited to your estate at death. Anything else that you give or bequeath upon death over that amount would be taxed.

It's actually a smart thing to do if you think the exemption amount is going to go down in the future. In the past, the IRS has grandfathered gifts from estates that were under the exemption amount when they were given, even if the exemption amount has subsequently gone down.

But I encourage you to get good legal advice before you do anything. The people who are most confident are usually wrong.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Op,

How much money do you have?
$14m? Then you have enough to talk to an estate attorney.

Actually if it's a couple and they have 2 children, they can each gift up to $13 million to each child before triggering gift/estate taxes. So it would take $52 million to be relevant.

A few states do have estate taxes, though.

Nice try, but you cannot gift $13m to EACH kid.

You are thinking about the yearly gift allowance. Where you can gift $18K to each family member (or anyone) and each spouse can do it. So if you have 2 kids, each are married, then you can gift $36K to each kid and $36K to their spouses. ($144K), And the same $36K to each grandkid

That is what we do already. Simple way to spend down while alive, and let the kids/grandkids use it when it matters most (20/30s for kids and the GK from birth onwards---knowing their 529s will be fully funded for $90K college currently)

PP was correct, except the unified estate/gift exemption amount is $13.61 million in 2024, to be precise. You can gift that much to your children now (per spouse per child). All it would trigger is a filing reporting the gift (no tax) and that amount would be credited to your estate at death. Anything else that you give or bequeath upon death over that amount would be taxed.

It's actually a smart thing to do if you think the exemption amount is going to go down in the future. In the past, the IRS has grandfathered gifts from estates that were under the exemption amount when they were given, even if the exemption amount has subsequently gone down.

But I encourage you to get good legal advice before you do anything. The people who are most confident are usually wrong.

I need to clarify this -- which makes my point about legal advice on this forum. The $13.61 million exemption is *per spouse* (the credit is per person and portable between spouses), but must be divided between the children. So if one spouse predeceases, and the surviving spouse elects to "port" the exemption (you should), the surviving spouse could give $13.61 million to each child.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Op,

How much money do you have?
$14m? Then you have enough to talk to an estate attorney.

Actually if it's a couple and they have 2 children, they can each gift up to $13 million to each child before triggering gift/estate taxes. So it would take $52 million to be relevant.

A few states do have estate taxes, though.

Nice try, but you cannot gift $13m to EACH kid.

You are thinking about the yearly gift allowance. Where you can gift $18K to each family member (or anyone) and each spouse can do it. So if you have 2 kids, each are married, then you can gift $36K to each kid and $36K to their spouses. ($144K), And the same $36K to each grandkid

That is what we do already. Simple way to spend down while alive, and let the kids/grandkids use it when it matters most (20/30s for kids and the GK from birth onwards---knowing their 529s will be fully funded for $90K college currently)

PP was correct, except the unified estate/gift exemption amount is $13.61 million in 2024, to be precise. You can gift that much to your children now (per spouse per child). All it would trigger is a filing reporting the gift (no tax) and that amount would be credited to your estate at death. Anything else that you give or bequeath upon death over that amount would be taxed.

It's actually a smart thing to do if you think the exemption amount is going to go down in the future. In the past, the IRS has grandfathered gifts from estates that were under the exemption amount when they were given, even if the exemption amount has subsequently gone down.

But I encourage you to get good legal advice before you do anything. The people who are most confident are usually wrong.

I need to clarify this -- which makes my point about legal advice on this forum. The $13.61 million exemption is *per spouse* (the credit is per person and portable between spouses), but must be divided between the children. So if one spouse predeceases, and the surviving spouse elects to "port" the exemption (you should), the surviving spouse could give $13.61 million to each child.

Ah PP who thought estate tax could be avoided by splitting between more children/heirs.

Personally don't care because I will never have the amount of money to be an issue, but apologies for getting that wrong.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Op,

How much money do you have?
$14m? Then you have enough to talk to an estate attorney.

Actually if it's a couple and they have 2 children, they can each gift up to $13 million to each child before triggering gift/estate taxes. So it would take $52 million to be relevant.

A few states do have estate taxes, though.

Wrong. The lifetime exemption for an individual is north of $13 million. If I have one child or three I can only put in $13.

So for a couple it’s $26M? Am I reading you correctly?

[Anonymous]

Anonymous wrote:If you have an irrevocable trust, how did you decide how much to transfer into it? What percentage of your NW did that represent? Thank you.

My siblings and I are beneficiaries on a pair of irrevocable SLATs our parents set up for one another. Their goal was to fill each one to the maximum lifetime gift limit ($13.6M or so) and then let those assets grow in an estate tax sheltered fashion. I believe you can even pay taxes on gains made within the trust from money outside the trust.

I’m no expert but something to look into as you can put money away while still having access to it if you need down the line (with some restrictions but you don’t run the risk of giving away too much and going broke)

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Op,

How much money do you have?
$14m? Then you have enough to talk to an estate attorney.

Actually if it's a couple and they have 2 children, they can each gift up to $13 million to each child before triggering gift/estate taxes. So it would take $52 million to be relevant.

A few states do have estate taxes, though.

Nice try, but you cannot gift $13m to EACH kid.

You are thinking about the yearly gift allowance. Where you can gift $18K to each family member (or anyone) and each spouse can do it. So if you have 2 kids, each are married, then you can gift $36K to each kid and $36K to their spouses. ($144K), And the same $36K to each grandkid

That is what we do already. Simple way to spend down while alive, and let the kids/grandkids use it when it matters most (20/30s for kids and the GK from birth onwards---knowing their 529s will be fully funded for $90K college currently)

Hit return too soon.
The $13M is what you each can currently gift in Total upon death without triggering the estate tax at federal level (state levels may apply at lower amounts or not at all).

This is still wrong. It’s not “upon death,” it’s a lifetime exemption. You can do it when ever you want.

Never ever get tax or estate planning advice from dcum.

[Anonymous]

Anonymous wrote:

Anonymous wrote:If you have an irrevocable trust, how did you decide how much to transfer into it? What percentage of your NW did that represent? Thank you.

My siblings and I are beneficiaries on a pair of irrevocable SLATs our parents set up for one another. Their goal was to fill each one to the maximum lifetime gift limit ($13.6M or so) and then let those assets grow in an estate tax sheltered fashion. I believe you can even pay taxes on gains made within the trust from money outside the trust.

I’m no expert but something to look into as you can put money away while still having access to it if you need down the line (with some restrictions but you don’t run the risk of giving away too much and going broke)

My parents set up a SLAT and it makes me very nervous. If the beneficiary spouse dies unexpectedly early, I think we the downstream beneficiaries would just end up paying money back to the donor spouse, depending on the state of other assets. Not that we wouldn’t happily do that but you throw in dementia or a horrible new spouse and any family could end up strained.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If you have an irrevocable trust, how did you decide how much to transfer into it? What percentage of your NW did that represent? Thank you.

My siblings and I are beneficiaries on a pair of irrevocable SLATs our parents set up for one another. Their goal was to fill each one to the maximum lifetime gift limit ($13.6M or so) and then let those assets grow in an estate tax sheltered fashion. I believe you can even pay taxes on gains made within the trust from money outside the trust.

I’m no expert but something to look into as you can put money away while still having access to it if you need down the line (with some restrictions but you don’t run the risk of giving away too much and going broke)

My parents set up a SLAT and it makes me very nervous. If the beneficiary spouse dies unexpectedly early, I think we the downstream beneficiaries would just end up paying money back to the donor spouse, depending on the state of other assets. Not that we wouldn’t happily do that but you throw in dementia or a horrible new spouse and any family could end up strained.

My parents have each set up a SLAT for the other. I still don’t fully understand how it’s all set up but I think that eliminates the concern you’re talking about.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Op,

How much money do you have?
$14m? Then you have enough to talk to an estate attorney.

Actually if it's a couple and they have 2 children, they can each gift up to $13 million to each child before triggering gift/estate taxes. So it would take $52 million to be relevant.

A few states do have estate taxes, though.

Nice try, but you cannot gift $13m to EACH kid.

You are thinking about the yearly gift allowance. Where you can gift $18K to each family member (or anyone) and each spouse can do it. So if you have 2 kids, each are married, then you can gift $36K to each kid and $36K to their spouses. ($144K), And the same $36K to each grandkid

That is what we do already. Simple way to spend down while alive, and let the kids/grandkids use it when it matters most (20/30s for kids and the GK from birth onwards---knowing their 529s will be fully funded for $90K college currently)

PP was correct, except the unified estate/gift exemption amount is $13.61 million in 2024, to be precise. You can gift that much to your children now (per spouse per child). All it would trigger is a filing reporting the gift (no tax) and that amount would be credited to your estate at death. Anything else that you give or bequeath upon death over that amount would be taxed.

It's actually a smart thing to do if you think the exemption amount is going to go down in the future. In the past, the IRS has grandfathered gifts from estates that were under the exemption amount when they were given, even if the exemption amount has subsequently gone down.

But I encourage you to get good legal advice before you do anything. The people who are most confident are usually wrong.

I need to clarify this -- which makes my point about legal advice on this forum. The $13.61 million exemption is *per spouse* (the credit is per person and portable between spouses), but must be divided between the children. So if one spouse predeceases, and the surviving spouse elects to "port" the exemption (you should), the surviving spouse could give $13.61 million to each child.

Assuming you are a lawyer, thanks for sharing. Please note that no one is running away to implement every legal thought they come across here. This is part of their 'research'. Please don't hesitate to share legal advice (or opinions if that will make you rest easy). Most legal questions go unanswered or poorly answered but lawyers don't hesitate to ask financial questions by the hundreds.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Op,

How much money do you have?
$14m? Then you have enough to talk to an estate attorney.

Actually if it's a couple and they have 2 children, they can each gift up to $13 million to each child before triggering gift/estate taxes. So it would take $52 million to be relevant.

A few states do have estate taxes, though.

Wrong. The lifetime exemption for an individual is north of $13 million. If I have one child or three I can only put in $13.

So for a couple it’s $26M? Am I reading you correctly?

DP. Yes.

[Anonymous]

Anonymous wrote:If you have an irrevocable trust, how did you decide how much to transfer into it? What percentage of your NW did that represent? Thank you.

I’d also love to know what total net worth situations are putting up to $30m of asset cost bases into IRREVOCABLE trusts, which would then not be taxed at all upon our deaths and transfer to the kids.

Do households with over $30m of likely net worth start doing this? You can’t get it back out whilst living so you have to know you’ll never need it yourself or your kids until later.

$50m NW?

$100m nw?

>$200m HNW plus lots of assets? (Many commercial real estate buildings or oil&gas wells)

No one would put their one small business interest share in it incase of a future windfall,’if they had mainly salary, stocks and a house in their taxable estate, right?

[Anonymous]

What’s the profile of a first gen family actually setting one of these up?

There are a lot of drawbacks and zero flexibility if you don’t have a ton of other wealth or ongoing high income elsewhere.