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Key Takeaways

  1. The lifetime estate and gift exemption has more than doubled since 2017. 
  2. Expanded limits will expire at the end of 2025, assuming no additional law changes. 
  3. Donors with a sizable estate may make tax-free annual gifts to family and friends. 
  4. There is potential opportunity using higher gift and lifetime exemptions with a CRT/PIF. 
  5. Parents may gift annual exemptions to fund life insurance for wealth replacement.

The U.S. wealth landscape is changing dramatically, creating an immediate need to prepare for the near future. Baby Boomers and the Silent Generation are expected to pass down some $84.4 trillion1 in assets through 2045, with $72.6 trillion going directly to their heirs. Charity-minded individuals have a unique and timely opportunity to take advantage of a new law that lessens the tax burden for generational wealth transfer.

Since the Tax Cuts and Jobs Act (TCJA) was implemented in 2017, the lifetime estate and gift exemption has more than doubled to $12.92 million from $5.6 million for individuals, and to $25.84 million from $11.18 million for married couples. If there are no significant tax law changes, this provision will sunset at the end of 2025, effectively halving the limits. This creates tremendous opportunity to start planning for these changes by considering three key strategies.

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U.S. Legacy Income Trusts® (Legacy Income Trusts) are pooled income funds described in Section 642(c)(5) of the Internal Revenue Code established by U.S. Charitable Gift Trust® (Gift Trust), a tax-exempt public charity offering donor-advised funds. All activities of the Gift Trust and the Legacy Income Trusts and the participation of Donors and income beneficiaries in the Legacy Income Trusts are subject to the requirements of state and federal law, the terms and conditions of the applicable Declaration of Trust, the current information statement and/or gifting booklet and the completed forms submitted by each Donor. The Board of Directors of the Gift Trust (Board of Directors) reserves the right to modify the program of the Gift Trust and the Legacy Income Trusts at any time, subject to the provisions of the applicable Declaration of Trust and state and federal law. Any contribution to the Gift Trust or a Legacy Income Trust, once accepted by Eaton Vance Trust Company (Trustee), represents an irrevocable commitment. Contributions cannot be rescinded or changed, and are subject to the exclusive legal control of the Gift Trust, the Trustee and the Board of Directors. Donors to the Gift Trust and the Legacy Income Trusts should be motivated by charitable intent. As charitable giving vehicles, the Gift Trust and the Legacy Income Trusts should not be treated as, and are not designed to compete with, investments made for private gain. An intention to benefit the Gift Trust and one or more qualified charitable organizations eligible for support by the Gift Trust should be a significant part of the decision to contribute. The tax consequences of contributing to the Gift Trust or a Legacy Income Trust will vary based on individual circumstances. Prospective Donors should consult their own tax advisors. Distributions to Legacy Income Trust income beneficiaries are not guaranteed by any party, and are subject to investment risk. In considering potential changes in the distribution rates of the Legacy Income Trusts, the Trustee will assess their long-term earnings potential and seek to balance the interests of current and future income beneficiaries and the charitable remainder interests. Neither the Gift Trust nor the Legacy Income Trusts has been registered under federal securities laws, pursuant to available exemptions. Neither of the Gift Trust nor the Legacy Income Trusts is guaranteed or insured by the United States or any of its agencies or instrumentalities.

Eaton Vance Distributors, Inc. (Placement Agent) is a paid solicitor of the Gift Trust and the Legacy Income Trusts, receiving compensation as described in the applicable information statement or gifting booklet.

This site and the materials herein are directed only to certain types of contributors and to persons in the United States where the Gift Trust and Legacy Income Trusts are authorized for distribution.

The foregoing discussion applies to the currently offered Legacy Income Trusts and the predecessor Legacy Income Trusts established by the Gift Trust in 2019, which ceased accepting new contributions on January 1, 2022. This discussion also applies to the pooled income funds established by the Gift Trust prior to the Legacy Income Trusts, which are also no longer accepting new contributions.

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