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Nov 7, 2017 |

Making Gifts in Trust

Nov 7, 2017 - Estate Planning

Despite the tax savings, you may be uneasy about making outright gifts to your children and grandchildren, due to the loss of control over when and how they use the gift. This concern can be addressed by making the gifts in trust, which will allow you to determine when they receive the money and how it is to be used.

There are special requirements for ensuring that a gift in trust qualifies for the $14,000 annual exclusion. Usually, the trust agreement is drafted to provide the beneficiary with sufficient control over the gift that it is considered a “present” interest rather than a future interest. (This is called a “Crummey” Trust, named after the family that first successfully used this approach.) Although there is a risk of the beneficiary withdrawing the gift from the trust, the beneficiary should be dissuaded from doing so upon realizing that you will likely not make any further gifts to the trust.

If you are interested in making a gift in trust, call us. We will be glad to explain how this is done and we have drafted many such Trust Agreements.

Drake, Hileman & Davis

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