Brian A. Raphan, Esq.
The short answer is that gift transaction costs are only part of what needs to be considered. Many important benefits that can result from gifting
-Asset protection from future creditors of beneficiaries. Preservation of the exclusion of capital gain upon sale of the Settlors’ principal residence (the Settlor is the person making the trust).
-Preservation of step-up of basis upon death of the trust Settlors o Ability to select whether the Settlors or the beneficiaries of the trust will be taxable as to trust income.
-Ability to design who will receive the net distributable income generated in the trust.
-Ability to make assets in the trust non-countable in regard to the beneficiaries’ eligibility for means-based governmental benefits, such as Medicaid and Supplemental Security Income (SSI).
-Ability to specify certain terms and incentives for beneficiaries’ use of trust assets.
-Ability to decide (through the settlors’ other estate planning documents) which beneficiaries will receive what share, if any, of remaining trust assets after the settlers die.
-Ability to determine who will receive any trust assets after the deaths of the initial beneficiaries.
-Possible avoidance of need to file a federal gift tax return due to asset transfer to the trust.