Overview of Lifetime Gift and GST Tax Planning

This memorandum provides a broad overview of lifetime estate planning.

Under the tax law enacted on December 22, 2017 (the “Act”), the Federal estate, gift and generation-skipping transfer tax exemptions doubled as of January 1, 2018. This increase is scheduled to revert to 2017 levels (indexed for inflation) in 2026. Clients may therefore wish to take advantage of the opportunity to make significant lifetime gifts prior to 2026, thereby potentially reducing the overall tax cost of transferring property to family members.

This memorandum is divided into six parts, as follows:

• Section I discusses the annual exclusion from gift tax and other “tax-free” gifts.
• Section II discusses the benefits of making early use of an individual’s Federal gift tax exemption and generation-skipping transfer (“GST”) tax exemption.
• Section III discusses considerations relating to the substantial increase in the Federal gift tax exemption, including ways to make use of the exemption while retaining potential use of the property for the donor or the donor’s spouse.
• Section IV discusses ways to enhance lifetime gifts.
• Section V discusses techniques designed to shift the appreciation on assets to lower generations.
• Section VI discusses the potential benefits of making taxable gifts in excess of the Federal gift tax exemption even though such gifts will result in the imposition of a Federal gift tax.

Please click here to read the full alert memorandum.