Giving lifetime gifts to family members is a tried-and-true method for reducing your taxable estate. The problem? You have to give up control over the assets.
Strategy: Set up a Crummey trust. Despite the negative-sounding name, this estate planning technique can produce favorable tax results.
As long as you meet certain requirements (see below), you essentially keep control of the assets while removing them from your estate. In other words, “you can have your cake and eat it, too.”
Here’s the whole story: Under the annual gift-tax exclusion, you can give assets valued up to a specified limit to each family member each year without triggering any gift tax.
The exclusion, which is indexed in $1,000 increments, is $14,000 for 2015. Thus, you can give three children a maximum of $42,000 this year with zero gift tax ($84,000 for a joint gift by a married couple).
However, with this method, you run the risk that the money or prop...(register to read more)