VII. Transfers During Life And At Death

Introduction

We go through several types of asset transfers throughout our lifetimes.

Lifetime Transfers

Section V goes over the advantages of gifting property during life versus making bequests at death.

Transfer Type Gifts and Lifetime Transfers Bequests at Death Sales During Life
Support Excluded from Gross Estate Included in Gross Estate N/A
Qualified Transfers Excluded from Gross Estate N / A N / A
Annual Exclusion Excluded from Gross Estate N / A N / A

Arm's-Length Transactions

Transfers to Loved Ones

Transfers Not Subject to Gift Tax

Transfers not subject to gift tax are mentioned in Section V.

Gifts Outright and In Trust

Partial Sale-Gift Transactions

Full Consideration Transfers/Sales

A private annuity is a transaction between two (usually related) private parties.

SCIN vs Private Annuity

Formation of a GRAT

Family Limited Partnerships (FLP)

This is a limited partnership created under state law with the primary purpose of transferring assets to younger generations using valuation discounts.

Gift and Estate Tax Consequences

Asset Control

Asset Protection

Design and IMplementation

Summary

The SCIN and the private annuity are both sales transactions for adequate consideration and the retained interest trusts (GRAT/QPRT/TPPT) are partial gift/partial sale transactions; on the other hand, the FLP is often used to engage in a series of gifts.

Medicare/Medicaid

Transfers to Charities

(Mentioned more in detail in Section IX)

Transfers at Death

Property can be transferred at death in one of three ways:

  1. By Will
  2. By contract (beneficiary designation)
  3. By operation of law (titling of property, use of trusts, intestacy)

IRA Transfers

If an IRA owner has started receiving distributions and dies before the entire interest is distributed, the distributions to a non-spouse beneficiary must start no later than December 31st of the year following the owner's death. The spouse, however, has the option of rolling over the IRA assets into his or her own account and treating the IRA assets as his or her own.

Transfers by Will

Universal / Residual Legatees

Per Stirpes / Per Capita

Disinheritance

Property Transferred at Death By Contract

Transfers at Death by Operation of Law

Titling
Trusts
Probate

Charitable Transfers at Death


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