Plain-English definitions for the terms you'll encounter on your financial journey.
A technique that allows gifts to a trust to qualify for the annual gift tax exclusion by giving beneficiaries a limited time to withdraw funds.
A federal tax applied to an individual giving anything of value to another person without receiving something of equal value in return.
Annual Gift Tax Exclusion — The specific amount of money or value one person can give to another in a single year without having to report it to the IRS.
Grantor Retained Annuity Trust is a legal arrangement where you transfer assets into a trust for a set time while keeping an income stream, which helps minimize taxes when passing wealth to heirs. It is essentially a way to move your investments to your children while locking in current tax values to avoid future gift tax hits.
Lifetime Gift Tax Exemption — The total amount a person can give away over their entire life before being required to pay federal gift taxes.