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The Net Gift Strategy: Good for a Bear MarketThe Net Gift Strategy: Good for a Bear Market

In a bull market, one of the best ways to transfer wealth is by a sale to a grantor trust. Little wonder that it's been so popular for the past 20 years. But a net gift coupled with a loan for the gift tax can transfer more wealth and at a faster rate than a traditional sale to a grantor trust for a promissory note. Even when one figures in the settlor's losing the use of the funds that pay the gift

David A. Handler

December 1, 2008

21 Min Read
Wealth Management logo in a gray background | Wealth Management

David A. Handler

In a bull market, one of the best ways to transfer wealth is by a sale to a grantor trust. Little wonder that it's been so popular for the past 20 years.

But a net gift coupled with a loan for the gift tax can transfer more wealth and at a faster rate than a traditional sale to a grantor trust for a promissory note. Even when one figures in the settlor's losing the use of the funds that pay the gift tax, the net gift approach still can leave beneficiaries more total wealth. And the longer the donor lives after the gift is made, the greater the net gift's benefit.

Moreover, a traditional sale for a note only transfers wealth when investment returns are positive. If anything became clear in the 2008 financial crisis, it's tha...

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About the Author

David A. Handler

 

David A. Handler is a partner in the Trusts and Estates Practice Group of Kirkland & Ellis LLP.  David is a fellow of the American College of Trust and Estate Counsel (ACTEC), a member of the NAEPC Estate Planning Hall of Fame as an Accredited Estate Planner (Distinguished), and a member of the professional advisory committees of several non-profit organizations, including the Chicago Community Trust, The Art Institute of Chicago, The Goodman Theatre, WTTW11/98.7WFMT (Chicago public broadcasting stations) and the American Society for Technion - Israel Institute of Technology. He is among a handful of trusts & estates attorneys featured in the top tier in Chambers USA: America's Leading Lawyers for Business in the Wealth Management category, is listed in The Best Lawyers in America and is recognized as an "Illinois Super Lawyer" bySuper Lawyers magazine. The October 2011 edition of Leading Lawyers Magazine lists David as one of the "Top Ten Trust, Will & Estate" lawyers in Illinois as well as a "Top 100 Consumer" lawyer in Illinois. 

He is a member of the Tax Management Estates, Gifts and Trusts Advisory Board, and an Editorial Advisory Board Member of Trusts & Estates Magazine for which he currently writes the monthly "Tax Update" column. David is a co-author of a book on estate planning, Drafting the Estate Plan: Law and Forms. He has authored many articles that have appeared in prominent estate planning and taxation journals, magazines and newsletters, including Lawyer's Weekly, Trusts & Estates Magazine, Estate Planning Magazine, Journal of Taxation, Tax Management Estates, Gifts and Trusts Journal. He is regularly interviewed for trade and news periodicals, including The Wall Street Journal, The New York Times, Lawyer's Weekly, Registered Representative, Financial Advisor, Worth and Bloomberg Wealth Manager magazines. 

David is a frequent lecturer at professional education seminars. David concentrates his practice on trust and estate planning and administration, representing owners of closely-held businesses, principals of private equity/venture capital/LBO funds, executives and families of significant wealth, and establishing and administering private foundations, public charities and other tax-exempt entities. 

David is a graduate of Northwestern University School of Law and received a B.S. Degree in Finance with highest honors from the University of Illinois College of Commerce.