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Estate and gift tax benefits QSTs and ESAs can be used as tools to benefit-estate planning. They make it possible to shift income to younger family generations without paying most of the overwhelming estate taxes currently imposed by the IRS. How? Contributions made to a Section 529 QST or Education Savings Account (Education IRA) are excluded from both gift taxes and the generation-skipping transfer tax. With an election to treat contributions as if they were made equally over five years, a couple can contribute up to $110,000 per beneficiary in a single year. The amount will be treated as a present completed gift and will not be included in the donor’s lifetime unified credit. In addition, the income earned on the contributions is totally exempt from both estate and federal income taxes. These contributions can lead to significant savings for the taxpayer and their extended family as well as result in affordable education for future generations. |
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