Estate Tax Mastery: Gifting Strategies for Wealth Protection

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Gifting Your Estate: Estate and Gift Tax Strategies - Featuring: Anthony Trinchini, Senior Tax Associate 

Financial security isn't just about what you build—it's about how effectively you pass it on. When senior tax advisor Anthony Trinchini joins the Knowing What Counts podcast, he cuts through the complexity of estate planning to reveal strategies that protect wealth while minimizing tax exposure.

The conversation begins with the essential mechanics of gift and estate taxes. Anthony explains how the annual exclusion ($19,000 per recipient in 2025) works alongside the lifetime exemption (nearly $14 million per person). The key insight? Gifting appreciating assets early freezes their value for tax purposes while shifting all future growth outside your estate—a powerful wealth preservation technique too many people discover too late.

Trusts emerge as versatile tools with distinct advantages. Revocable trusts don't reduce estate taxes but help avoid probate. Irrevocable trusts remove assets from your estate entirely. Grantor trusts allow you to cover the income taxes, essentially making additional tax-free gifts. The discussion explores specialized options like QPRTs (Qualified Personal Residence Trusts) for transferring homes at discounted values, GRATs (Grantor Retained Annuity Trusts) for capturing excess growth of appreciating assets, and SLATs (Spousal Lifetime Access Trusts) that allow married couples to reduce estate taxes without surrendering complete access to assets.

Beyond trusts, Anthony highlights two additional powerful strategies: 529 education plans with their front-loading capability ($95,000 individual/$190,000 couple tax-free gifting in a single year) and family LLCs that enable valuation discounts of 20-40% when gifting business interests. His most emphatic advice? Start early with coordinated planning between your CPA and estate attorney. Estate planning isn't one-size-fits-all—it should align with your family's unique goals and values.

Ready to protect your legacy and minimize tax burdens? Connect with the expert team at MPCPAs today by visiting mpgroupcpa.com or calling 413-739-1800. Remember, success begins with knowing what counts.

To learn more about MP CPAs visit:
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Episode Transcript

Speaker 1 (00:01):
Welcome to the Knowing what Counts podcast, the
place where expert guidancemeets smart financial decisions.
Whether you're a high net worthindividual or a thriving
business, the experts at MPCPAsare here to help you protect and
optimize your wealth.
Let's get started, becausesuccess begins with Knowing what

(00:22):
Counts.
Because success begins withknowing what counts.

Speaker 2 (00:26):
Estate planning isn't just about preserving wealth.
It's about gifting itstrategically, and this episode
will unpack estate and gift taxstrategies to maximize impact
while minimizing tax burdens.
Welcome back everyone.
I'm Sophia Yvette, co-hostslash producer, back in the
studio with Anthony Trinchini,senior tax advisor at MPCPAs.

(00:48):
Anthony, how's your day beengoing so far?

Speaker 3 (00:52):
Everything's well, Sophia.
I'm glad to be here.

Speaker 2 (00:55):
Awesome, well, glad to have you on, tony.
Can you introduce yourself?

Speaker 3 (01:01):
Yes, my name's Tony Trinchini.
I'm a senior staff accountantat MPCPAs, and I began working
at MPCPAs after graduating fromUMass Eisenberg in 2020.

Speaker 2 (01:12):
Now, what's the first thing people should consider
when thinking of gifting orplanning their estate?

Speaker 3 (01:20):
The first thing to consider is how the gift and
estate tax system works.
For example, in 2025, you cangive up to $19,000 per person
per year without using any ofyour lifetime exemption.
That's called the annualexclusion.
For larger gifts that exceedthat $19,000 threshold, you can
use part of your lifetimeexemption, which is just under

(01:42):
$14 million per person in 2025.
And you're probably askingyourself why does this matter?
Right, it's because giftingearly lets you shift your future
growth out of your estate.
If you hold onto thoseappreciating assets, whether
it's stock, real estate or abusiness, they'll continue

(02:04):
growing inside of your taxableestate, and that just leads to a
big tax hit later.
So gifting those assets now notonly uses your exemption more
efficiently, but it also freezesyour estate value for tax
purposes.

Speaker 2 (02:19):
Wow, now I heard a lot about utilizing trusts.
How do trusts help plan forgifting and estate tax?

Speaker 3 (02:27):
Well, trusts are really flexible tools.
You have several differenttypes of trusts.
Revocable trust doesn't reduceestate taxes, but it's great for
avoiding probate and organizingyour assets, particularly your
home or your personal residence.
So that's why it's important todistinguish that legal advice

(02:49):
and tax advice are not always inperfect alignment, because a
revocable trust for tax purposesisn't ideal, but when it comes
to putting your property into arevocable trust, legally, that's
a smart thing to do.
An irrevocable trust, on theother hand, removes the assets
from your estate and that helpslower your estate taxes.
Then you have grantor trusts.

(03:10):
A grantor trust is a type ofirrevocable trust where you
whether you're the grantor orthe estate you still pay the
income taxes for the trustearnings.
So that lets the trust gofaster for your beneficiaries
and because you're covering thetax, it's like making additional
tax-free gifts.
And another good example thatwe're starting to see a lot of

(03:33):
is Cuperts, and a Cupert is aqualified personal residence
trust.
Essentially, a Cupert is theprocess of transferring your
home into a trust is the processof transferring your home into
a trust.
You retain the right to live init for a set number of years it
could be four, five, 10 yearsBecause your heirs don't get
that house right away.
The gift is valued at adiscount, so that's going to be

(03:56):
less than the home's marketvalue.
If you, the grantor of thistrust, if you outlive this term,
the home and all futureappreciation are out of your
state.
The only downside to this isthat the heirs won't get a step
up in basis, so if they do sellthat property, they'll be
exposed to additional capitalgains taxes.
And then there are alwaysgrantor retained annuity trusts

(04:22):
and we call these GRATs and theyopen a whole other can of worms
.

Speaker 2 (04:28):
Now let's get into that can of worms.
What is grantor retainedannuity trust and how do those
work?

Speaker 3 (04:38):
Well, a GRAT is another type of irrevocable
trust.
Well, a grant is another typeof irrevocable trust, and it's a
trust in which you, the grantor, you put assets in and you
receive annual payments back fora set number of years, hence
the name annuity trust.
It's like an annuity.
At the end, anything left overgoes to your beneficiaries of

(05:00):
that trust with no gift tax.
So this works well with assetsthat are likely to appreciate,
because if they grow faster thanthe IRS has assumed rate, that
excess growth passes to yourheirs outside of your estate.
But, like a cuper, you'll needto outlive the term for it to
work, and there's really nodownside to this, though.
Unless the assets don't grow,then there's nothing left to be

(05:22):
gifted to the beneficiariesafterwards.

Speaker 2 (05:26):
Now, what is a SLAT, and is it different than a GRAT?

Speaker 3 (05:33):
Yeah, it is A SLAT, or it's called a Spousal
Lifetime Access Trust.
It's also an irrevocable trust,but it works differently than a
grad.
With a SLAT, one spouse makes agift into a trust for the
benefit of the other spouse andthis removes the assets from the
taxable estate while stillkeeping indirect access through

(05:56):
the beneficiary spouse.
So the spouse can use theassets within this SLAT, but now
those assets are outside of theestate.
So if it's structured properly,the gift is tax-free because
you can utilize the lifetimeexemption, as I alluded to
earlier, and all the futuregrowth for those assets stays

(06:17):
outside the estate.
So it's a good strategy formarried couples who want to
lower the estate tax and notgive up full access to those
assets.
And I guess the only downsideto this is if the spouse passes
away or if the couple divorcesfor whatever reason, the access
to those assets is lost.
So they offer flexibility, butthey do bring a different

(06:40):
element of risk.

Speaker 2 (06:43):
Now, Anthony, let's get into the 529 plans.
They're well known amongst manypeople.
How can you use 529 plans aspart of gifting strategy too?

Speaker 3 (06:56):
Yeah, 529 plans are great.
I recommend them to a lot ofclients.
It's a tax advantage savingsaccount designed to help
families save for educationexpenses, so college, private
school, even, I think, somevocational programs.
The money grows tax-free and itcan be withdrawn tax-free if
it's used for what theydetermine is qualified education

(07:18):
costs.
So from a gifting perspective,determine is qualified education
costs.
So from a gifting perspective,529s are pretty essential
because you can contribute up tothe $19,000 per year per
beneficiary without triggeringgift tax under the annual
exclusion.
It's great.
And another additional benefitis that you can front load it.
So that means you can frontload for five years.
That means you can gift $95,000.

(07:41):
Front load for five years?
That means you can.
You can gift 95 000 or ifyou're a married couple, you can
gift 190 000 in a single year.
Gift tax free does not eat intothe lifetime exemption and it
gets prorated over those fiveyears.
So it lets you remove a largeamount from your estate quickly,
efficiently, and then thegrowth happens outside of your
taxable estate.

Speaker 2 (08:01):
Now what methods other than trusts can be used as
gift assets?

Speaker 3 (08:12):
Well, a popular and effective strategy is using a
family LLC, especially whengifting investments or real
estate.
You transfer assets into theLLC and then gift the membership
interest to the family.
So because those interests arenot really marketable, the IRS
says you can discount them.
So it's called valuationdiscount.
So sometimes 20 to 40% of thefull asset value is discounted
for gift tax purposes.
So that helps save yourlifetime exemption.

(08:33):
So you transfer more economicvalue while using less of your
lifetime exemption, and then youalso retain control over the
investments inside of thatfamily LLC.

Speaker 2 (08:44):
Wow.
Now one final question for youtoday what's your biggest tip
for people just getting startedwith gifting or planning for
estate?

Speaker 3 (08:54):
Yeah, I'd say start early.
Reach out to your CPA and anestate planning attorney, get
them both on a call and starttalking to them about what your
options are.
The sooner you begin, the moretime you have to get those gifts
out of your estate and to growtax-free outside of your estate.
And one thing to consider isjust it's not a one size fits

(09:15):
all for everybody.
Everybody's different.
You have different goals, soyou have to work with an advisor
to build that plan and makesure that it fits your family's
goals and your needs and yourfamily's values.
And it doesn't necessarilyalways have to be for tax
purposes.

Speaker 2 (09:30):
Wow.
Thank you so much for today,Anthony, and all those helpful
insights for our listeners.
We'll catch you in the nextepisode, maybe.
Have a fantastic rest of yourday thank you, sophia, it's been
a pleasure thanks for listeningto the knowing what counts
podcast.

Speaker 1 (09:48):
ready to optimize your wealth and protect your
future, visit the mpgroupcpacomor call 413-739-1800 to connect
with our team of experts.
Remember, success is aboutknowing what counts.