Discussion Question Week 8 Essat - 275 Words

Discussion Question Week 8 (Essay Sample) Content: Discussion QuestionStudent:Professor:Course title:Date:Discussion QuestionsResponse to Question 1Irrevocable Trusts offer several tax advantages over direct gifting/gift payment, particularly with respect to capital gains taxes. If it is a grantor-type trust, each of the appreciated assets transferred into the trust, for instance real estate or a stock portfolio, could still obtain a step-up in basis after the grantor passes away. If these assets were directly gifted to the grandchildren, they would maintain similar basis as the donor had, and typically owe substantially more in capital gains taxes. Secondly, Irrevocable Trust also offers a tax advantage for the principal home of a grantor. The trust will retain the capital gains tax exclusion of the grantor under USC 121 that would be unavailable if the residence was gifted directly to the beneficiaries during the owners lifetime. Thirdly, settlers could even establish their trusts so that all of their trust proceeds is actually tax deferred until the trustee shares out the proceeds to the grandchildren. In essence, this could present some considerable tax advantages to the family of the grantor.Response to Question 2Gift and estate taxes could take a significant bite out of ones estate. If a client has considerable assets, a Certified Public Accountant can help him/her reduce, or even get rid of, federal estate taxes. This will allow the clients heirs to inherit the maximum amount of tax-free money. One tax-planning strategy that an accountant can utilize for lifetime giving which will lower overall gift and estate taxes f...