The Gift Trust is an irrevocable instrument that allows you to maximize the annual and lifetime Gift Tax exemptions while maintaining control over the purposes for which such gifts may be used. The Gift Trust also serves to reduce the size of the creator’s taxable estate.
A Gift Trust requires annual maintenance, such as sending out withdrawal notices to the beneficiaries. If the requirements are not followed, there is a risk that the IRS will not respect the transfers as present gifts and the transferred assets will be included in the giftor’s estate at death. It is imperative that a Gift Trust be established properly and the communication between the attorney and client continue through the life of the trust in order for the trust to achieve its purpose.