Miscellaneous and Advanced
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No. The KissTrust is irrevocable. While you need not continue to make contributions to the trust it may not be terminated until all assets are paid to or on behalf of the Beneficiary.
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A trust is irrevocable when the Grantor completely gives up ownership and control of the trust assets, and the trust cannot be terminated or unwound prior to completion of its trust purpose. As a result, the trust is a separate entity, and must follow the rules established in the trust document regarding its operation.
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A KissTrust is irrevocable in order to eliminate the possibility (and temptation) that anyone - including creditors, ex-spouses or even the Beneficiary - can take away trust assets. KissTrust assets can only be used for its intended purpose.
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The KissTrust was designed to protect trust assets in the case of a divorce. Keep in mind that laws may change over time, so what is the current state law now, could be different in the future.
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KissTrust was designed to protect the assets from the Beneficiary's creditors. Keep in mind that laws may change over time, so what is the current state law now, could be different in the future.
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In the most tragic event that your loved one dies before his or her attaining maturity age, the balance of the KissTrust assets will go to the assigned Residual Beneficiary as noted in the trust. The Residual Beneficiary can be changed by:
- The Family Contact; or
- The Beneficiary upon achieving 21 years of age
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Yes. There is no reason why the child may not have all three benefits. Also, the KissTrust will not reduce or eliminate the benefits provided under either the pension or 401(k) plan, or Social Security.
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Generation Skipping Tax (GST) is complicated, but the good news is that most of the time it will NOT apply.
The following KissTrust gifts should NOT have GST implications:
- Gifts from any person into a KissTrust that do not exceed the donor’s annual gift tax exclusion amounts (currently the annual gift limit is $12,000 per person or $24,000 per married couple)
- Gifts of any amount to a KissTrust from a parent on behalf of his or her child
The following KissTrust gifts MAY have GST implications:
- Gifts into a KissTrust from a grandparent on behalf of a grandchild, grandniece or grandnephew greater than the current annual gift limit of $12,000 per person or $24,000 per couple; or
- Gifts into a KissTrust on behalf of a non family person who is at least 37½ years younger than the donor greater than the current annual gift limit of $12,000 per person or $24,000 per couple.
Want to give a large gift of $30,000 $50,000, $100,000 or more? TIP: If you are married, you can gift up to $24,000 in the first year and spread the remainder of the gift over the next several years. KissTrust can automatically debit your checking account every year up to the maximum limit. Email us admin@kisstrust.com for further assistance.
In summary, as long as you stay within the annual gift limit of $12,000 per person ($24,000 per married couple), GST should NOT be a concern. However, GST can be complicated and if you feel your gift meets the guidelines for GST implications; consult your financial advisor or estate planning professional for assistance and clarification.
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First … if your estate is expected to be less than $2,000,000 – you generally do NOT need to even consider Crummey Powers. However, over your lifetime, regular gifting to the KissTrust may reduce the size of your gross estate tax exclusion.
The IRS allows for a combined estate tax exclusion of $2,000,000 for a married couple. Each gift you make, like a gift into a KissTrust, uses a corresponding portion of the $2,000,000 estate exclusion. So for example, if you gave $10,000 each to 5 grandchildren your estate tax exclusion would be reduced by a total of $50,000 to $1,950,000.
In short, Crummey Powers allow you to make the gift and not use any of your $2,000,000 combined estate tax exclusion.
Here is how it works:
The "Crummey Power" is a provision contained in KissTrust which permits the trust beneficiaries to withdraw gifts you make to the trust for a 30 day period following the beneficiary receiving a WRITTEN notice. Because of this limited withdrawal right, the gift is considered a completed gift. This allows gifts to the trust to qualify for the federal annual gift tax exclusion and as a result not use any of the Combined Estate Tax exclusion. The exclusion effectively exempts annual gifts up to $12,000 per trust beneficiary from the federal gift tax.
Example, you transfer funds to the irrevocable KissTrust containing a Crummey Power. The trustee must then give adequate notice to each beneficiary stating that the funds can be withdrawn. (Use this link for a draft notice form for your use) The time frame for withdrawal should be reasonable (30 days or more). Whether or not the beneficiaries exercise their right, the gift still qualifies for the annual gift tax exclusion. If the withdrawal right is not exercised, the trustee may use these gifts for the purposes permitted under the KissTrust, (investing the money).
In summary, Crummey Powers are commonly used in irrevocable trusts. But for them to succeed in qualifying gifts for the annual exclusion, the rules must be followed carefully.
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Print the Crummey Power addendum (use this link for a draft document for your use) and include in you KissTrust files.
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The beneficiaries must receive prompt notice when each gift has been made and be given reasonable time and opportunity to request a withdrawal. (Use this link for a draft notice form for your use).
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Keep a copy of each notice provided in your KissTrust file folder and forward a copy to KissTrust
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Consult your estate planner or tax advisor to learn more about this whether Crummey Powers make sense for you.
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The age of majority is the age when an individual can sign contracts.
The age when a Beneficiary may completely control their UGMA or UTMA account is NOT necessarily the same as the age of majority and is typically later than the age of majority.
Use the link below to find out more.
