I—Benefits of GST Planning

One of the most powerful tools an advisor can offer his or her clients is a plan that exploits the generation-skipping transfer tax (GST) exemption for maximum leverage in avoiding transfer taxes.Simple quantitative models demonstrate how tremendously attractive the advantages can be when you can educate a potential client about the necessity for planning up and down the generational ladder to minimize transfer taxes. Those advantages only grow in allure when you add a second level of leverage using life insurance. Life insurance policies present a unique opportunity to create a multimillion-dollar initial funding source for the Family Bank, with potentially no gift tax costs, through careful planning of gifts for the payment of annual premiums and leveraging of the GST exemption.

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