2022 Trust Forum Presentations

NOW THAT YOU ARE GST EXPERTS WHAT SHOULD YOU DO? 1. Find out the IR for each trust you administer. 2. If a mixed IR, try to clean it up. 3. Situate investments to maximize growth in IR = 0 trusts and cash to spend in IR =1 trusts. 4. Remember that you want to keep IR = 0 trusts as intact as possible when responding to requests for funds from children, and distribute first from IR = 1 trusts. 5. If distributing to grandchildren, try to do so only from IR = 0 trusts. 6. When there are additions to a trust, you must recalculate the IR. For example, if annual exclusion gifts are made to a trust, or if cash is contributed to an ILIT to pay premiums, the math must be done … if you don’t know the trust’s IR, you can’t know how to administer that trust.

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REPORTING GENERATION-SKIPPING EVENTS AND PAYING THE GST 1. Taxable Terminations a. Trustee must file Form 706-GSC(T) by April 15 in the year following the termination. b. The Trustee pays the tax. 2. Taxable Distributions a. Trustee must file Form 706-GSC(D-1) by April 15 in the year following the taxable distribution. b. The beneficiary pays the tax. Note: If trustee pays the tax, this is another taxable distribution to report and pay tax on. 3. Direct Skips a. Taxpayer (GP) making the gift reports on Part 2 of Schedule A on Form 709. b. Taxpayer (GP) pays the tax.

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