South Carolina Trust
and Estate Law Blog

Since it is the giving season, let’s talk estate and gift taxes! The IRS recently announced the new estate and annual gift tax exclusion amounts for 2016. In 2016 the estate tax exclusion amount will be increased to $5.45 million per individual estate, which means a married couple can shield up to $10.9 million from estate taxes. The annual gift tax exclusion amount remains at $14,000.00 per donor per individual recipient.

These amounts had originally been set at $5 million and $13,000.00 respectively, by The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 enacted on December 17, 2010, since indexed to inflation by the American Taxpayer Relief Act of 2012 enacted on January 2, 2012.

If you anticipate that your estate (including life insurance, retirement benefits, and inheritances you might receive from others) may be above $5.45 million individually, or above $10.9 million as a married couple, you should consider a thorough estate planning review. There are often ways to help reduce or even eliminate estate and gift tax liability through careful estate planning.

You can see the IRS announcement here..

I get this question pretty frequently. The terms above refer to two very general categories of trusts.

An inter vivos trust is a trust that was created during the lifetime of its creator (the Grantor or Trustor).

A testamentary trust is set up upon the death of its creator, usually in the creator’s Last Will and Testament.

Some distinctions are that an inter vivos trust may be freely revocable and modifiable by its creator during his/her lifetime, whereas the testamentary trust is typically irrevocable, except under certain circumstances. The inter vivos trust may be set up to accomplish asset management, incapacity planning, or Medicaid planning for its creator. A testamentary trust is useful to protect the creator’s eventual beneficiaries from dissipating their inheritance through immaturity, creditors’ claims, divorce, and the like.

These two trust types probably represent the most general distinction that can be made among trusts. Make no mistake though, there are a lot of different types of trusts that can be created. In future posts, I will write more about these different types of trusts.