Prescriptions for Donor’s Remorse: Using Disclaimers and Other Techniques to Hit the “Undo Button” on Taxable Gifts
With the election bringing a change of administration in Washington, the control of the Senate still in the balance and the Treasury Department confirming the “use it or lose it” feature in the “anti-clawback” regulations, practitioners have understandably been counseling many clients on making large gifts to use their current $11.58 million exclusion before it disappears in 2026, or possibly earlier.
What if the family later regrets it? How, why and when can a donor or donee simply undo a large gift? How can a practitioner best prepare for it ahead of time?
In their exclusive LISI Webinar, Ed Morrow and Paul Hood take you through the maze of undoing gifts and the consequences involved! This webinar will explore the following topics:
- How married donors can later decide whether to make a gift in trust qualify for the marital deduction or not – and why standard Clayton QTIP analysis is a deceptive and dangerous guide.
- Can spouses make “waterfall” disclaimers of intervivos gifts into multiple variations of trusts?
- What are the clear statutory and regulatory guidelines on how to undo gifts and when may it be done well beyond nine months?
- How do the rules for disclaimers for minors and those under age 21 work differently?
- How should we caution clients to avoid “acceptance” that would preclude a valid disclaimer?
- What are the important considerations when disclaimers may involve UTMA custodians, guardians, agents under powers of attorney or virtual representation statutes?
- What about disclaimers by trustees? Even if it’s possible, should you be wary?
- What important features of disclaimer law may vary state by state?
- What differentiates disclaimers from declining to take Crummey gifts?
- Segregation strategies to undo gifts of assets that decrease in value yet keep the gifted assets than appreciate.
- What trust clauses should be added to create contingency plans for disclaimers different from dispositions in the event a beneficiary dies? Even (especially) for SLATs?
- Should non-qualified disclaimers cause a different disposition in the trust than qualified disclaimers to enable greater flexibility?
- Can (should) trust protectors/decanting amend existing irrevocable trusts that received recent gifts to enable more creative disclaimers?
- At what point could the IRS consider disclaimer strategies (especially in trust) to be abusive? Could a disclaimant ever be considered a de facto agent of the donor?
- What are the asset protection traps of disclaimers, even when state law does not consider them to be “transfers”?
- When can gifts be rescinded (and still be effective for gift tax purposes)?
The composition and control of the Senate is still undecided. No one knows exactly how the political and tax winds will change in 2021. As practitioners, we should inform our clients of the most flexible options available to themselves and their family - both pre and post gift. This should include a discussion of disclaimers of inter vivos gifts and the alternative dispositions that such disclaimers can accomplish with appropriate foresight. Don’t miss this timely and important webinar!!!
There will be no CE for this webinar
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