Wealth & Risk Management Blog

William Byrnes (Texas A&M) tax & compliance articles

Posts Tagged ‘GST’

Could 2011 & 2012 Gifts Come Back to Bite the Grantor

Posted by William Byrnes on August 8, 2011


Whether or not to give substantial lifetime gifts in 2011 and 2012 is going to be a hot topic between now and the end of 2012. But deciding whether to take advantage of the record high ($5 million) gift, estate and GST tax exclusion amount and low (35%) transfer tax rate isn’t a trivial matter.

Even your most tax savvy clients are going to need help deciding whether to take advantage of the new law.

The problem is that the new law—which was put into place by the Tax Reform Act of 2010—is scheduled to lapse on January 1, 2013. So is it worth taking the risk that Congress will radically change transfer tax laws for years post-2012? And what will happen to your clients’ transfer tax liability if Congress does change the law?

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

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Life Insurance and the Generation—Skipping Transfer Tax

Posted by William Byrnes on November 15, 2010


Why is this Topic Important to Wealth Managers?  Provides details about one concept that wealth managers often overlook, the generation skipping transfer tax.  Also presents general concept themes and examples to show effective uses of life insurance and trust in consideration of the tax. 

In general, the generation-skipping transfer tax is levied on the value of life insurance that is transferred during the grantors lifetime or at death, to a skip person. [1]  The GST is levied in addition to estate and gift taxes. [2]

The generation-skipping transfer (GST) tax “scheduled to resume in 2011 at a rate of 55%, with a $1 million exemption. The rate was 45% in 2009, with a $3.5 million exemption.” [3]  For more information about the expiring tax cuts and new tax rates, see our blogticle: AdvisorFYI: Estate and Gift Taxes, Tax Cuts and More

“Certain direct gifts that qualify for the gift tax exclusion may also qualify for an annual exclusion that can be applied against the GST tax.” [4]  Many wealth managers encourage clients to take full advantage of the annual exclusion to avoid GST tax considerations at some later point.  However, “the expiration of the GST tax has complicated matters for wealthy individuals hoping to make 2010 gifts in trust that skip generations.” [5]  The use of trusts in consideration of the GST tax is discussed below.  For examples of insurance uses with trusts generally, see our previous blogticle: Trusts that Purchase Life Insurance; Known Formally as the “Irrevocable Life Insurance Trust

Please link to AdvisorFYI for the entire blogticle.

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