Irrevocable Gift Trusts for children and future lineal descendants provide a powerful and advantageous estate planning strategy. These trusts are particularly beneficial when individuals wish to transfer assets to the next generation but are concerned about the risks of gifting assets outright. When assets are transferred into an Irrevocable Gift Trust, they can benefit from estate and generation-skipping tax exemptions, allowing the assets to grow outside the taxable estate.
For those contributing assets like closely held business interests, the gifts may even be valued at a discount. This ensures that any future appreciation of these assets will not be subject to estate tax upon the grantor’s passing, as the assets are no longer considered part of their estate. When properly established, Irrevocable Gift Trusts can shield assets from estate, gift, and generation-skipping transfer taxes indefinitely. Moreover, if structured correctly, a beneficiary may also serve as a trustee, ensuring the trust’s assets remain protected from creditors, including in the case of divorce.
Benefits of Establishing Irrevocable Gift Trusts
Establishing Irrevocable Gift Trusts can provide several advantages:
- Tax Efficiency: By removing the assets from the estate, they avoid future estate and generation-skipping transfer taxes.
- Asset Protection: Even if the beneficiary serves as a trustee, the trust’s assets can be safeguarded from creditors or divorce settlements.
- Valuation Discounts: Business interests or other assets transferred to these trusts may qualify for valuation discounts, making them more tax-efficient.
Seek Expert Guidance on Irrevocable Gift Trusts
If you are considering setting up Irrevocable Gift Trusts as part of your estate plan, consulting with an experienced estate planning attorney is essential. Visit Hudack Law Estate Planning Attorney to learn more about our services. We’re proud to serve California, Utah, and Arizona. Call our Toll-Free line at (877) 314-4309 to schedule a consultation with one of our experienced attorneys.