Impact Of Irrevocable Trusts On Gift Tax And Estate Tax Essay

Length: 2 pages Sources: 3 Subject: Accounting / Finance Type: Essay Paper: #48071122
Excerpt from Essay :

Thank you for your consideration of our company as your trusted Certified Public Accountant (CPA) and we hope that this is the beginning of a mutually beneficial relationship. Our company provides superior accounting services to clients with a wide range of accounting issues and needs. Therefore, we are ready to provide excellent accounting guidance and expertise that will help you achieve personal and financial success. In addressing your issue of irrevocable trusts, estate tax and gift tax, we will utilize a six-step procedure to provide you with the most reliable professional assistance.

Based on your request to establish an irrevocable trust for your two grandchildren, the determination of the impact of such a trust on gift tax and estate tax is important. An irrevocable trust is one with specified terms that cannot be changed even by the grantor once the agreement has been signed (Garber, 2017). In your case, there is no restriction on the transfer of assets or amounts to the irrevocable trust. Additionally, once the transfer has been carried out assets are no longer incorporated in the estate of the individual providing it to the trust. While $14,000 can be transferred to the irrevocable trust annually tax-free...

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Tax Center, n.d.).

The major issue in your situation is how to reduce future estate taxes for your grandchildren. Secondly, you also need to determine how to maximize the potential benefits of the payment of gift taxes on transfers of property. The determination of these issues will help in effective decision making on the best alternative or course of action for minimizing future estate taxes on the irrevocable trust and maximizing the potential advantages of gift tax payments on transfers of property.

One of the applicable authorities in your case is the Internal Revenue Service (IRS), which is the federal body that handles all issues relating to taxation. This organization is mandated with the task or responsibility of administration of income tax for individuals and business entities. The other applicable authority in your situation is the U.S. Congress since it's the federal agency that is responsible for creating and establishing policies and regulations that govern the administration of income tax.

However, the most effective authority is the Internal Revenue…

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