Crummey Trust/Crummey Powers

There is a yearly exclusion from gift tax of $11,000 per year per donee in 2003 (the amount rises periodically). This applies only to gifts of present interests. A gift in trust is not considered a present interest. For instance there is a gift in trust if you give money to a trustee to hold and pay the income to grandchildren each year until the youngest reaches 25 when all the rest of the trust assets are distributed to them. Since the grandchildren cannot get the trust assets presently, this is not considered a present gift.

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Estate and Gift Tax Planning Tips

Good article from Forbes about Estate and Gift Tax Planning with 10 tips.

Forbes.com has teamed up with the authors of Ernst & Young Tax Guide 2006 to develop a series of tips to help you avoid paying more tax than necessary. The circumstances of your situation will determine if you qualify, so review the tax code and check with your tax adviser.

Here are ten things you need to know about estate and gift tax planning.

Charitable Deduction

There is allowed as a deduction from the taxable estate any gift to a qualified group organized and operated exclusively for religious, charitable, scientific, literary or educational purposes. A gift to a trustee for the benefit of any such organization also generates the deduction. A gift of a remainder interest also generates the deduction.

A gift of a remainder interest also qualifies. For instance if you will assets to a trustee on your death to be held for the benefit of your spouse while he or she is alive and then to be paid to a charity. The value of that interest at the time of your death is deductible. Actuarial tables provided by IRS are used to make the valuation.