1. 1 Gifts n Generosity / personal motives n estate reduction n income shifting (‘86 Act) n income tax deduction (charity) n issue of control

2. 2 Gift 1. Property law u donative intent u delivery 2. Income tax u detached and disinterested generosity

3. 3 Gift (cont.) 3. Gift tax u less than adequate consideration in money or money’s worth u direct / indirect u part gift / part sale u basis issues

4. 4 Indirect Gift Mom & Dad 50% stock $1,500,000 FAMCO Daughter 50% stock $1,500,000 FAMCO redeems Mom & Dad’s stock for cash and notes totaling $1,000,000.

5. 5 2503 Taxable Gifts (a) total amount of gifts (b) annual exclusion u present interest rule u $10,000 / donee u inflation adjustment

6. 6 2503 Taxable Gifts (cont.) (c) transfer for minor u control issue u present interest if F by or for benefit F no substantial restriction F pass at age 21 F estate or GPA if death u UGMA / UTMA

7. 7 2503 Taxable Gifts (cont.) (e) educational / medical exclusion u qualified transfer u to provider

8. 8 2503 Taxable Gifts (cont.) n 2513 - split gift election u spouse u one half u consent u all

9. 9 Trusts Legal title v. Beneficial ownership (equitable)

10. 10 Trusts A) Express u private u public u inter vivos u testamentary u active u passive / stand by

11. 11 Trusts A) Settlor, trustor, grantor B) Trustee C) Beneficiary D) Capacity E) Intent u cy pres F) Res

12. 12 Trusts n Issues of Income and Principal u Accumulation trust u Discretionary trust u Ascertainable standard provision u Income trust u Annuity trust u Total return unitrust u Sprinkle trust

13. 13 Trusts n Asset Protection u Control F Wealth transfer isues F Perpetuities u Asset Management u Tax Savings u Spend Thrift Provisions

14. 14 Trusts n Asset Protection (cont.) u Alaska and Delaware Trusts u Offshore Trusts u Special Needs Trusts

15. 15 Trusts Trusts as a Separate Taxable Entity EstateTrust Bene Individual Bene’s Individual Bene’s

16. 16 Life Estate n A to B for life u reversion u per autre vie u term of years u successive terms and Rule Against Perpetuities u remainder

17. 17 Remainder a.vested A to B for life, remainder to C. b.contingent A to B for life, remainder to C if then living. A to B for life, remainder to C if attains age 35, if not, to D.

18. 18 Crummey Powers n demand right u judicial history u IRS resistance n uses u ILIT u 2503 (c) window u 2503 (b) trust

19. 19 Crummey Powers (cont.) $70,000 / year n 2 daughters: Crummey + ½ inc.; ½ rem n 5 grandchildren: Crummey + contingent interests Trust