North Carolina Estate Planning Blog

It's Not Too Late to Use Your $5 Million Exemption!

Estate Planning attorneys all across the country are frantically working to help their clients utilize the $5.12 million gift and estate tax exemption before it disappears at year end.  Most people are making gifts to irrevocable trusts that will save taxes and provide creditor protection for generations of descendants.

We have only two weeks left, with Christmas intervening, but all is not lost.  For those who want to provide a meaningful legacy this holiday season, we can still help.  As my colleague Steve Oshins in Las Vegas suggested, here is the way last minute planning can be accomplished:

1. Set up a simple one-page gift trust with just the essential terms so you have a valid trust under state law.

2. Give the settlor’s best friend (or attorney/CPA) as Trust Protector the power to completely amend and restate the trust (maybe for a selected period of time like three months) in the Trust Protector’s sole and absolute discretion.

3. Get the trust fully executed and funded with the $5MM gift before year-end.

4. Reconvene in 2013 and have the Trust Protector restate the trust with regular provisions. The settlor can make recommendations, but it clearly must be done in the sole and absolute discretion of the Trust Protector to avoid IRC 2038 (estate tax inclusion).
 

So, if you are one of the tardy ones, don't despair.  Email me early next week and let's get this done.

Greg Herman-Giddens - ghgiddens@trustcounselpa.com

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