By: Martin M. Shenkman, CPA, MBA, JD
GST Tax and Portability For many clients, the decision to use trusts or not might be simplified by the introduction of GST tax considerations. The portability provisions are designed to eliminate the need for the “mere wealthy” to have to incur the cost and complexity of dividing title to assets and having a bypass trust. But for those who are the more than “mere wealthy,” portability was not extended to GST tax. Thus, for those estates wishing to take advantage of the GST exemption of the first spouse to die, a trust will have to be created in any event. As noted in an earlier discussion, if compound interest is the Eighth Wonder of the World, compounding inside a dynasty trust that is GST exempt is the Eighth Wonder of the World with whipped cream on top. Unless the portability benefit is extended to encompass GST, any family unit with potentially more than a $5 million estate should carefully evaluate the loss of GST benefits. If any significant wealth can be held onto through the generations, the GST benefits of trust planning on the first death could prove quite valuable over time.
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