Many strategies for high-net-worth clients involve the use of trusts. Getting money into a trust can trigger gift tax, though. An established planning technique still works but its days might be numbered under a new initiative from Washington.
“The annual gift tax exclusion applies to present interest gifts,” points out Mitch Kauffman, who heads a wealth management firm with offices in Pasadena and Santa Barbara, Calif. “Those are gifts that can be enjoyed now. By contrast, gifts to trusts such as an irrevocable life insurance trust are of a future interest so they do not typically qualify for the exclusion.”
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