• Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Home
  • Our Firm
    • About Our Firm
    • Attorney and Staff Profiles
  • Services
    • Asset Protection & Business Planning
    • Elder Law & Medicaid Services
    • Estate and Gift Tax Figures
    • Estate Planning Services
    • Family-Owned Businesses & Farms
    • Legacy Planning
    • LGBTQ Estate Planning
    • Pet Planning
    • SECURE Act
    • Special Needs Planning
    • Trust Administration & Probate
  • Elder Law
    • Coping With Alzheimer’s
    • Emergency Medicaid & Nursing Home Planning
    • Guardianship & Conservatorship
    • Hospice Care
    • Medicaid Planning
    • Veterans Benefits
  • Seminars
  • Areas We Serve
    • Ballwin
    • Chesterfield
    • Clayton
    • Creve Couer
    • Des Peres
    • Edwardsville
    • Fenton
    • Glen Carbon
    • Glendale
    • Kirkwood
    • Maryland Heights
    • Oakland
    • Sappington
    • St. Louis
    • Sunset Hills
    • Valley Park
    • Webster Groves
  • Resources
    • Asset Protection Worksheet
    • Elder Law Resources
      • Chesterfield Elder Law
      • Fenton Elder Law
      • Kirkwood Elder Law
      • Sunset Hills Elder Law
      • St. Louis Elder Law
      • St. Peters Elder Law
      • Webster Groves Elder Law
    • FREE Estate Planning Seminars
    • FREE Estate Planning Worksheet
    • Frequently Asked Questions
      • Estate Planning
      • Families Without an Estate Plan
      • Legacy Wealth Planning
      • LGBTQ Estate Planning
      • Trust Administration & Probate
    • Is Your Estate Plan Outdated?
    • Medicaid Resources
    • Multimedia
    • Newsletters
    • Presentations
    • Pre Consultation Form
    • Probate Checklist
    • Probate Resources
    • Retirement Planning Checklist
    • Special Reports
      • Advanced Estate Planning
      • Basic Estate Planning
      • Estate Planning For Niches
      • Trust Administration
  • Reviews
    • Our Reviews
    • Review Us
  • Blog
  • Contact Us

Amen, Gantner & Capriano | Your Estate Matters, L.L.C.

St. Louis Estate Planning & Elder Law Attorneys

Logo
CONNECT WITH US TODAY (314) 966-8077
ATTEND A FREE WEBINAR
Home / Estate Planning Articles / Gifts to Minors: Sharing Your Wealth the Smart Way

Gifts to Minors: Sharing Your Wealth the Smart Way

November 30, 2013

Compliments of Our Law Firm,
Written By: The American Academy of Estate Planning Attorneys

One way to reduce your estate tax bill is to give money away during your lifetime. If you are a parent or a grandparent, giving to the children in your life is a great way to accomplish this. By doing so, you can help your children or grandchildren build their financial futures, with tax savings as a natural by-product. With a top estate tax rate of 40%, this by-product can be quite significant.

IRS rules limit how much you can give away each year without reducing your overall gift and estate tax exclusion of $5 million (adjusted for inflation, $5.34 million in 2014). Through 2014, the annual exclusion is $14,000. This means that an individual can give up to $14,000 each year to any other individual without reducing their lifetime exclusion. Parents or grandparents can combine their annual exclusions to give $28,000 annually per couple.

UGMA/UTMA Accounts

This situation gets complicated if your children are still minors. Until they reach adulthood, the law requires that minors have someone manage their money for them. Many parents fulfill this requirement by establishing a Uniform Gifts to Minors Act (UGMA) or a Uniform Transfers to Minors Act (UTMA) account. This is a simple, efficient arrangement that allows you to manage funds on behalf of your child until your child is legally able to take control of the account.
The problem with these accounts is that you are required to turn the entire balance over to your child when he or she reaches age 21 (18 in some jurisdictions). As every parent knows, children mature at different ages and not every young adult is ready to manage a large sum of money at that age.  A great way to address this issue is to set up an Irrevocable Trust.

Irrevocable Trusts

An Irrevocable Trust is one alternative to an UGMA/UTMA account. Estate planning attorneys often recommend this option because an Irrevocable Trust can be tailored to the needs of an individual child. There is no set age at which Trust assets must be distributed to a beneficiary; instead, the assets can be held in Trust for as long as the parents wish. Trust funds can be distributed at periodic intervals instead of in one lump sum. The distribution of assets can even be tied to the achievement of goals such as college graduation or maintaining full-time employment.

An Irrevocable Trust carries greater up-front and administrative costs than an UGMA/UTMA account; however, when deciding between the two options parents should consider the potential risks of handing over a large sum of money to their child at a young age.

As you plan your estate, it is important that you consult with an experienced estate planning attorney. He or she can help you balance the needs of your family with the latest in tax and estate planning law and strategy.

Primary Sidebar

Download our free Estate Planning Worksheet

There's a lot that goes into setting up a comprehensive estate plan, but with our FREE worksheet, you'll be one step closer to getting yourself and your family on the path to a secure and happy future.
  • This field is for validation purposes and should be left unchanged.

Follow Us

  • Facebook
  • twitter
  • linkedin
  • youtube

Where We Are

Amen, Gantner & Capriano
10733 Sunset Office Drive, Suite 425
St. Louis, MO 63127

See Larger MapGet directions

Office Hours

Monday8:30 AM - 5:00 PM
Tuesday8:30 AM - 5:00 PM
Wednesday8:30 AM - 5:00 PM
Thursday8:30 AM - 5:00 PM
Friday8:30 AM - 12:00 PM

Map

map for Amen, Gantner & Capriano Your Estate Matters office
  • Advantages of Working With Our Firm
  • About The American Academy
  • Disclaimer
  • Privacy Policy
  • Sitemap
  • Contact Us

Footer

Connect to us

  • Facebook
  • twitter
  • linkedin
  • youtube
footer-logo

© 2023 American Academy of Estate Planning Attorneys, Inc.

Amen, Gantner & Capriano,
Your Estate Matters, LLC

Attorney Advertisement