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Dianne Williams Wildt, MBA
Certified Retirement Counselor®
Since 1983 in the financial services and investment industry
Retirement Pathways, Inc.
4500 Bowling Blvd., Suite 100
Louisville, KY 40207
Phone: 502-797-1258
Email: dianne@retirementpathways.com
Website: www.retirementpathways.com
September/October 2024
Minimize The Estate Tax Bit with an IDGT
The current favorable estate tax exemption amount is scheduled to expire on December 31, 2025, unless Congress acts to extend it or make it permanent. Without action, the exemption amount will revert from $13.61 to $5.6 million per individual, adjusted for inflation. If this could impact you, consider transferring assets out of your estate starting now. With this in mind, this issue begins a series of trust strategies that may help minimize estate tax.
Short Definition
Intentionally defective grantor trusts (IDTs) can transfer wealth to beneficiaries while minimizing estate tax, however the grantor continues to pay income taxes on transferred assets.Setting It Up
Using your available lifetime estate-and gift-tax exclusion, you, the grantor, irrevocably transfer assets you expect to appreciate to the IDGT with no federal gift-tax consequences. Be aware that after the transfer, you can no longer financially benefit from those assets. If the value of the gift exceeds your available tax exclusion, you may sell the asset to the trust on an installment sale basis for a long-term note (say 20 years) and incur no capital gains due to the trust’s irrevocable status. As the assets held in the trust value grow, estate tax on the growth may be avoided for multiple generations.Intentionally defective grantor trusts (IDGT) aren’t for every high-net-worth individual. Your trusted tax and legal professionals can determine if one might be appropriate for you.
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Investment advisory services offered through American Capital Management, Inc., a State Registered Investment Advisor. Retirement Pathways, Inc. is independent of American Capital Management, Inc.
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