USING IRREVOCABLE TRUSTS TO LEVERAGE THE LIFETIME GIFT AND ESTATE TAX EXEMPTION

^{By Louis Green, CFA®, CFP®, CRPS®}

Using Irrevocable Trusts to leverage the Lifetime Gift and Estate Tax Exemption

Irrevocable trusts can potentially reduce estate taxes.

Below is a list of trusts for your review.^1,2,3,4 Consult an estate attorney to determine whether one of these is suitable for you.

Grantor Retained Annuity Trust (GRAT): To potentially reduce taxes on distributions to family members.

Irrevocable Life Insurance Trust (ILIT): Used for estate liquidity and removal of insurance proceeds from your estate.

Qualified Personal Residence Trust (QPRT): Allows for the transfer of ownership of your residence to your beneficiaries while potentially reducing gift or estate taxes.

Spousal Lifetime Access Trust (SLAT): Potential for estate tax savings and indirect access to the trust.

Charitable Trusts: Enable donation of assets to charity while retaining an income stream.

Generation-Skipping Trust: May help reduce estate taxes and pass assets to grandchildren and later generations.

Crummey Trust: May provide estate tax savings and asset protection through annual gifts to a trust.

Intentionally Defective Grantor Trust (IDGT): Allows you to remove assets from your estate while remaining the owner for income tax purposes. 

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^{1 https://www.dominion.com/trusts/types-of-irrevocable-trusts}

^{2 https://www.nolo.com/legal-encyclopedia/irrevocable-living-trusts.html}

^{3 https://learn.valur.com/crummey-trusts-slats/}

^{4 https://www.fidelity.com/viewpoints/wealth-management/insights/intentionally-defective-grantor-trusts}