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Practical Planning Tip: Year-end Strategic Gifting Strategies

December 10, 2023

Today’s year-end planning tip will cover Strategic gifting strategies:

As a result of the continued market volatility and challenging economy in 2023, certain assets may be depressed in value. Gifting these depressed assets, whether directly to a beneficiary or in trust, that have temporarily dropped in value BUT HAVE the potential for appreciation allows you to move assets out of your estate using less of your lifetime estate and gift tax exemption, while ALSO allowing you to protect all future growth from the eventual increase in asset values outside your taxable estate.  

Planning tip: For assets that were previously transferred to grantor trusts with retained “substitution powers” also should be assessed for opportunities to move low-basis assets out of such trusts at a lower current value in exchange for higher-basis assets of equivalent value. Using a substitution of assets to “undo” prior planning strategies could allow you to mitigate capital gains on the lower-basis assets that have appreciated inside the trust by returning them to your taxable estate, and thus allowing them to benefit from the step-up in basis at death, with no impact to your remaining available lifetime estate and gift tax exemption and no increase in the size of your taxable estate.

You can view the FULL video here.