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Charleston Gift Trust Attorneys

You’ve worked hard your whole life to earn a living and provide for your loved ones, but without careful planning, much of your legacy could be lost to federal estate taxes. While many people are aware that they can make annual gifts on a tax-free basis, another option is to create a gift trust. Nonetheless, the tax laws can be complicated, which makes having proper legal advice and guidance crucial.

At Wiles Law Firm, LLC, we assist our clients in South Carolina with setting up gift trusts as part of a comprehensive estate planning strategy. We are well-versed in the most recent changes to the estate tax laws and have a well-earned reputation for providing our clients with knowledge, insight and exceptional personal service. 

What is a gift trust?

Each person is allowed to give an unlimited number of people $15,000 ($30,000 for a married couple) annually, without paying a tax on that gift. This is referred to as a gift tax exclusion under Internal Revenue Code Section 2503(b). Only gifts of a “present interest” qualify for the exclusion, however, which means that the recipient must have the immediate right to use or control the proceeds. For this reason, gifts made to an irrevocable trust may be subject to gift and estate taxes. 

By establishing an irrevocable gift trust, however, gifts to the trust are not taxable because they are deemed to be gifts of a present interest. The trust beneficiaries must have the power to make withdrawals within a set period of time, however, usually 30 days after the gift has been made to the trust. This withdrawal window is important because it ensures the gift is considered a present interest rather than a speculative, future interest.

The withdrawal power is referred to as a “Crummey Power,” named after a taxpayer in a landmark tax case (Crummey v. Commissioner of the IRS 1968). The taxpayer created a trust that included an immediate withdrawal right that expired after a short time period. Although the IRS argued that the deposits to the trust were not present interest, the court ruled that the withdrawal right was a present interest, regardless of whether the recipient exercised that right. 

Ultimately, the annual gift tax exclusion applies to each recipient, multiple gifts amount can be made to as many children, grandchildren, or other individuals, which can amount to significant tax savings. When you work with the Wiles Law Firm, you will have peace of mind knowing that your assets and your loved ones will be protected.

What are the benefits of creating a gift trust?

In addition to the gift tax exclusion, a gift trust provides a number of benefits, not the least of which is asset protection. While nothing is bulletproof, irrevocable trusts provide the opportunity to protect the assets from claims of the creditors of the beneficiary. If the beneficiary runs into financial problems or causes an accident, the creditors will be unable to reach the trust assets. 

Similarly, the trust assets are protected if the beneficiary gets divorced, because the gift is considered separate property not subject to division. Finally, the trust assets are not subject to probate administration, provided that the trust names successor beneficiaries and contains instructions for future distributions. It is important to note, however, that a gift trust cannot be amended or modified once it has been put in place without court modification. In some cases, the trust can be modified by decanting to another trust.

What Wiles Law Firm Can Do For You

A gift trust is an excellent estate planning tool for those who want to provide for their loved ones. Our knowledgeable attorneys are well versed in the applicable rules under the tax code and highly adept at devising advanced estate planning strategies. We will take the time to get to know you and your family and understand your financial circumstances. This way we can determine whether setting up a gift trust is the best option for you. Another alternative for those with minor children is to transfer assets through the Uniform Gift to Minor Act. 

At Wiles Law Firm, your future is our primary concern and we will always put your best interests first. Call our office today or complete the convenient online contact form to set up a free consultation.

Wiles Law Firm, LLC helps clients with their estate planning needs in Charleston, South Carolina and the surrounding areas such as West Ashley, Summerville, North Charleston, Mount Pleasant, and John's Island.

Information on this website is not legal advice. Further, viewing of the enclosed information does not create an attorney-client relationship with Wiles Law Firm, LLC. Matters will be handled by attorneys who primarily practice out of our office in Charleston County located at 852 Lowcountry Blvd., Ste. 101, Mt. Pleasant, SC 29464. M. Emerson Wiles, III is the attorney responsible for this advertisement.

Any result Wiles Law Firm, LLC may achieve on behalf of one client in one particular matter does not necessarily indicate similar results can be obtained for other clients. Please contact a South Carolina estate planning attorney or one of our attorneys with Wiles Law Firm, LLC for a consultation regarding your unique estate plan.

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852 Lowcountry Blvd., Suite 101, Mount Pleasant, SC 29464
| Phone: 843-718-0232

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