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The income tax return information released by Governor and Mrs. Romney (the “Romneys”) reveals a well-thought out strategy for transferring wealth to the next generation. Certainly, Governor Romney was successful at Bain Capital and created considerable wealth for himself. What stands out in the eyes of tax advisors is that the Romney family trust has an estimated one hundred million dollars of assets. Regardless of your political preference, one must acknowledge the success of a plan that resulted in the transfer of such wealth.

Most readers are familiar with the estate tax but few are aware that transfers from a grandparent to a grandchild are subject to the Generation Skipping Transfer Tax (“GST”) at the highest estate tax rate in effect. Transfers out of trust to a grandchild may also be subject to the GST. Were it not for the GST, the government would not have an effective transfer-tax system, because property could be easily placed out of reach of the estate tax.

Due to the number of topics, this analysis is presented in [to be determined] parts, in order to cover the subject matter in detail.

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Topics:  Charitable Trusts, Dynasty Trust, Generation-Skipping Transfer, Grantor Retained Annuity Trust, Grantor Trusts, Hedge Funds, IRA, Mitt Romney, Private Equity, Required Minimum Distributions, Self-Canceling Installment Note

Published In: Wills, Trusts, & Estate Planning Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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