WALTHAM, MA – Ballentine Partners’ Senior Client Advisor, Drew McMorrow, was recently quoted in the Worth Magazine article “Top 10 Ways to Transfer Wealth”. The article discusses ways to navigate wealth transfer strategies in light of the Tax Relief Act before the legislation’s 2012 expiration date.
In terms of simple gifts, the new $5 million gift-tax threshold set for each individual encourages outright gifting. Drew McMorrow, Managing Director and Senior Client Advisor with Waltham, Mass – based Ballentine Partners, advises his clients to take advantage of these generous limits to provide responsible adult children and grandchildren with portfolios of their own. “It’s not healthy for adults, even young adults in formative years of learning the financial ropes of life, to live under the wing of trustees all the time, ” McMorrow says. Mr. McMorrow also explains not to overlook the value of paying the annual income tax for the gains and taxable earnings of assets held in grantor trusts. While not a particularly complex strategy, it will prove valuable over time. “None of the income tax payments are considered gifts,” McMorrow said. “This is a way of leveraging up the exemption.” An additional benefit of the higher gift-tax exemption is the qualified personal residence trusts (or QPRTs) and how it benefits even more people than it used to. For clients with substantial value tied up in residential property who intend their children to own it eventually, the higher exemption lets them allocate a larger amount to the QPRT. The contribution requires making a taxable gift, but the higher gift allowance provides a bigger exemption. “It’s a good strategy for getting a residence off the balance sheets, ” McMorrow says.