The Private Trust Company NA

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The Private Trust Company NA

Tax Planning
While tax planning was historically the primary reason for creating trusts, today, family planning, creditor protection, and asset preservation are the primary drivers. Trusts also provide protection for family members who may be unaccustomed to dealing with financial matters. They can offer protection of assets in the event of divorce or other litigation, or can ensure that funding is available for specific needs, such as education, health care or charitable interests.

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University Circle (6 miles)
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Primary Phone: (216) 771-0387

TollFree: (888) 771-6960

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Hanna Bldg

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Downtown Cleveland

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Private Trust Co NA

L PL Private Trust Co

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Trust Companies, Banks, Commercial & Savings Banks, Financial Planners, Financial Planning Consultants, Investment Advisory Service, Investment Management, Investments, Stock & Bond Brokers

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Phone: (216) 771-6960

Address: 1422 Euclid Ave, Cleveland, OH 44115

Website: http://theprivatetrustcompany.com

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The Private Trust Company NA

Tax Planning
While tax planning was historically the primary reason for creating trusts, today, family planning, creditor protection, and asset preservation are the primary drivers. Trusts also provide protection for family members who may be unaccustomed to dealing with financial matters. They can offer protection of assets in the event of divorce or other litigation, or can ensure that funding is available for specific needs, such as education, health care or charitable interests.
Charitable Giving
What is it? A charitable lead trust is a trust with both charitable and noncharitable beneficiaries. It is called a lead trust because the charity is entitled to the lead (or first) interest in the trust property, and the noncharitable beneficiary receives the remainder (or second-in-line) interest. The operation of a charitable lead trust is thus the exact opposite of a charitable remainder trust. Every year for the trust term, the charity receives a payment from the trust property. At the end of the trust term, the remaining assets pass to the noncharitable beneficiary. A charitable lead trust works like this: You transfer property to a trust. It can be almost anything: cash, securities, real property, a rare collectible item (though this would need to be sold to produce income). You choose a noncharitable beneficiary. This person can be anyone: you, your spouse, your hockey coach. You choose a charity. You determine how much money the charity will be paid each year from the trust assets. This payment can be either an annuity amount, which is a fixed amount of the initial fair market value of the trust assets, or a unitrust amount, which is a specified percentage of the value of the trust assets based on an annual revaluation of the assets. You determine how long the trust will last. It can be for a term of years or for the life of an individual who is then living. At the end of the stated period of time, all the remaining trust assets pass to the noncharitable beneficiary. Example(s): Mike decides to donate some money to his favorite charity. He transfers $200,000 to a 10-year charitable lead trust and names his wife, Carol, as the noncharitable beneficiary. Mike specifies that the payout rate to the charity will be a fixed 7% annuity amount. The result is that, every year for 10 years, the charity will receive a payment of $14,000, which is 7% of $200,000 (the initial fair market value of the trust assets). After 10 years, all the remaining property in the trust will pass to Carol. A charitable lead trust can be established to take effect either during your life (a living or inter vivos trust) or at your death (a testamentary trust). A charitable lead trust operates in an identical manner in either situation. The reasons you might choose one over the other include tax consequences and the ability to see your trust in operation. For example, in the case of a testamentary trust, your personal representative is entitled to subtract the present value of the charity’s interest from your gross estate. When can it be used? You want to donate an asset to charity for a period of time but want a noncharitable beneficiary to receive the property at a later date With a charitable lead trust, you can provide an income stream to your favorite charity for a period of years, potentially receive an income tax deduction, and, at the same time, provide for the eventual return of the trust property to a noncharitable beneficiary. The income stream to charity i
Estate Taxes
Avoiding Probate
When it comes to your estate plan, you don’t just have it drafted and put away until it is time for your loved ones to manage your lifetime of affairs. As your world changes year by year, it is critical that you review your estate plan and update it to stay aligned with your long-term financial goals. Here is an eight-step year-end estate planning checklist to help you organize and prioritize your estate planning strategy. 1. Have you reviewed your will? Reviewing your will as part of your year-end estate planning checkup is essential. As each year comes to a close, our life changes. These changes may impact your future financial plans and goals regarding your estate management should you die or become incapacitated. There are generally four types of wills that people choose from: Attested Written Will – This is the most common type of will. It is typed, printed, and signed by the testator and two witnesses. Holographic (Handwritten) Will – This will is handwritten and signed by the testator, and witnesses are recommended. Nuncupative (Oral) Will – Typically, these are instructions by someone too sick to create a written will on how they want their personal property distributed. Nuncupative wills are not legal in most jurisdictions. However, in those which they are legal, a set number of witnesses must write down the wishes of the incapacitated individual as soon as possible. Joint Will – A type of the last will and testament where two (or more) people, generally a married couple, transfer the entire estate to a surviving spouse when the first spouse dies. Upon the death of the second spouse, the children inherit everything. 2. Have you met your financial gift limit? In 2023, the annual gift tax exclusion (or gift tax limit) is $17,000 per recipient without having to pay taxes on those gifts. Any gifts above that amount must be reported to the IRS on your 2024 tax return (form 709). There are exceptions to this rule, and a financial professional can help you learn how it could impact your financial strategy. 3. Have you reviewed your retirement and life insurance beneficiaries? Reviewing your retirement and life insurance beneficiaries is important as people may get married or divorced, they may die, or a child or sibling may suddenly become a risk through addiction or an inability to manage money properly. In these or other relevant circumstances, you may want to modify the beneficiaries in your accounts. Beneficiaries typically don’t need to pay taxes on the life insurance death benefit they receive, especially if they receive it as a lump sum. If the beneficiary chooses to receive their payout as an annuity instead, any interest accrued may be subject to taxes. 4. Are your HCP and POA documents up-to-date and in a safe place? A health care proxy (HCP) is a document that names someone to express your desires and make health care decisions should you become incapacitated. Examples include medical directives, living wills, or advance
Tax Services
PTC serves in an administrative corporate trustee role and makes sure that trusts are managed and distributions occur according to the terms of the trust document. PTC also serves in an administrative corporate trustee role for all record keeping, accounting, and tax preparation services for trusts.
Real Estate Taxes
A qualified personal residence trust (QPRT) offers an excellent opportunity for homeowners with taxable estates to help reduce federal gift tax and avoid federal estate tax. What is a QPRT? A QPRT (pronounced “Q-Pert,” and sometimes referred to as a house GRIT) lets you give away your house, but still keep possession for a while. More specifically, a QPRT is an irrevocable trust into which you transfer your home while retaining the right to live there rent-free for a specified number (term) of years. At the end of the term of years, the property passes outright to your children or whomever you’ve named as the remainder beneficiaries. What are the potential tax savings? When you transfer a home into a QPRT, you’re considered to have made a gift to the remainder beneficiaries that is subject to gift tax. However, the value of the taxable gift isn’t the full fair market value of the home, as it would be with an outright transfer. Rather, the gift can be discounted to reflect the fact that you have retained an interest (the right to live in the home). IRS tables and current interest rates are used to determine the amount of the discount. Moreover, provided you outlive the term of years, the value of the home, plus any appreciation, will completely avoid estate tax because the home will have been removed from your estate. Tip: Each taxpayer has an applicable exclusion amount that, to the extent it has not already been used, can shelter transfers from federal gift or estate tax. The applicable exclusion amount is equal to the basic exclusion amount of $12,920,000 (in 2023, $12,060,000 in 2022) plus any applicable deceased spousal unused exclusion amount. Caution: The transfer of a home to a QPRT does not qualify for the $17,000 (in 2023, $16,000 in 2022) annual gift tax exclusion. What happens if I die during the term of years? If you die before the term of years expires, the home will be included in your estate for estate tax purposes (just as it would have been had you not created the QPRT). How long should the term be? Because you must survive the term of years to benefit from the QPRT, you might conclude that a shorter term would be best. However, there’s a tradeoff — the shorter the term of years, the larger the gift to the remainder beneficiaries and the smaller the tax savings. You must find the right balance, taking your age and health into consideration. What are the income tax consequences? For income tax purposes, a QPRT is typically set up as a grantor trust, which means that income and deductions, such as mortgage interest and real estate taxes, are accounted for on your personal income tax return. You also continue to pay for all expenses related to the home, such as repairs and insurance. Additionally, this arrangement preserves your ability to take the home sale capital gain exclusion ($250,000; $500,000 if married filing jointly) in case the home is sold before the term of years expires. There is also a significant drawba
Tax Deductions
What is it? A living trust (also known as a revocable or inter vivos trust) is a separate legal entity that you create to own property, such as your home, boat, or investments. You transfer some or all of your property to the trust as soon as it is created. During your lifetime, you control the trust; you can change the trust terms, or terminate the trust and take the property back. At your death, the trust becomes irrevocable and may continue to exist for many years. The trustee administers and distributes the trust property according to the terms of the trust. People create living trusts because they’re able to retain control over their assets while achieving other important goals, such as: Controlling the manner and timing of asset distributions to heirs Efficiently transferring assets to heirs Enabling someone else to manage property Protecting property in case of incapacity Avoiding probate Tip: Though a living trust is a separate legal entity, it is not a separate taxpayer during your lifetime. You are considered the owner of the trust assets for income tax purposes; all income, deductions, credits, and losses flow through to you. Upon your death, the trust becomes a separate taxpayer and different tax rules will apply (see Tax Considerations below). Caution: A living trust does not avoid estate taxes and does not protect assets from potential future creditors. To attain these objectives, the trust must be irrevocable. For more information, see Tradeoffs below. When can it be used? Cannot be used for some types of property Although a living trust can hold most types of property, it cannot hold: Qualified stock options or stock acquired under such a plan, at least until the holding period has passed An interest in a partnership, if prohibited by state law An interest in a cooperative or condominium, if prohibited by your contract with your co-owners An interest in a professional corporation (e.g., a law firm), because such an interest generally can only be owned by a professional (e.g., a lawyer) An IRA, although you can name your living trust as beneficiary of your IRA Strengths Lets you control your property until your death A living trust is revocable until your death. That means you can use or withdraw trust property, change the trust terms, add or remove beneficiaries, replace the trustee, or even revoke the trust entirely up until your death. This gives you flexibility to meet unknown future contingencies and still meet other goals. Allows distribution of your property to be customized A will generally transfers specific amounts or percentages of your property to your beneficiaries. By placing your property in a living trust, you can direct the trustee to distribute property only in certain situations, for example “to pay tuition,” or on certain occasions such as “on my son’s 30th birthday,” or at the trustee’s discretion, perhaps “to my children, as necessary to fund their educational needs.” This may be beneficial i
Income Tax
In a grantor trust, the grantor or person setting up the trust retains certain powers over the trust administration and property. These powers include the power to revoke (amend or terminate) the trust. The grantor also keeps control over the property inside the trust. The assets of the trust generally do not leave the grantor’s estate for estate or income tax purposes. The trust often uses the grantors social security number and does not have a tax identification number (TIN) or file its own return.
Capital Gains Taxes
REASONS TO CONSIDER A TRUST Should you set up a trust? Maybe you’ve been to a seminar where they scare the life out of you, convincing you to start one. Let’s demystify this murky but very important area. Trusts are legal arrangements that give control of assets to a person or an institution (the trustee) for the benefit of others, such as children. Trusts can save on taxes, ease inheritance squabbles and ensure that beneficiaries are treated fairly and according to your wishes. Let’s examine some uses of trusts: To Minimize Inheritance Taxes. Some call them “death taxes,” but that term has acquired a political tinge, so we’ll try to avoid upsetting partisan sensibilities. This year, you have to own at least $11.7 million in total assets — including your house, your cars, brokerage accounts, individual retirement accounts, 401(k)s and life insurance — before the tax kicks in. Taxes are typically due upon the second spouse’s passing, not the first to die. You should also be aware that a number of states impose their own estate taxes – and several have inheritance taxes – which kick in at lower threshold amounts than the federal estate tax. Above $11.7 million, without proper estate planning and a trust, you might pay 40% to the feds. Most people don’t have $11.7 million in assets, so they don’t have to worry about this tax, right? Maybe and maybe not. Tax legislation seems to change every year and many state governments are looking to close their deficits. So don’t assume that because you have less than $11.7 million that you’re in the clear. Congress has always had trouble dealing with this issue. Remember when the federal estate tax expired in 2010? To Avoid Probate. That’s a court that rules on inheritance questions if your wishes are not clear. If you don’t have a trust or a valid will, anything you own that doesn’t have a specific beneficiary designation goes through probate. Probate can be very time-consuming and emotionally draining. If your estate includes property held outside the state of residence, it may have to go through probate there as well. If the property is outside the U.S., the situation is even more complicated. Probate can be pretty expensive. Attorneys have the right to charge either a flat percentage rate, based on the value of your total estate, or they can charge “reasonable compensation,” which is debatable, but typically not negotiable. To Keep Your Family Finances Private. If you don’t have an estate plan properly executed by your death, your whole financial life can be public record, available to the masses. Yeah, you don’t even have to drive to the courthouse to snoop through someone’s estate. In many places, it’s available online these days. To Look After Disabled, Young or Irresponsible Children. Having a trust makes a ton of sense if you have a child with disabilities who can’t take care of himself. Or maybe we don’t want him showing assets on paper. Also, if you

Investment Management
It is often viewed as an honor to serve as trustee of a trust established by a loved one or friend. However, quite often the administrative duties can be time consuming, overwhelming or burdensome. PTC can assist an individual trustee by serving as Agent for Trustee. With the trustee maintaining complete control over investment management and discretionary distribution responsibilities, we can provide...
Mutual Funds
Some may fastidiously plan the path they want their assets to take but not give their beneficiary information the attention it needs and deserves. Designating the appropriate beneficiaries is essential for proper asset planning. Investors should periodically re-visit this information to make certain it still follows their intentions. It may not be the most pleasant conversation topic, but it very well could be an important one. Benefits of Beneficiary Reviews Manage assets. Nobody wants to spend their lifetime building wealth for it to end up paying taxes, penalties or going to the wrong person. Relationships may change. The person or people who were the beneficiaries selected before may not be the appropriate choice now. Annual beneficiary reviews may help ensure the assets do not pass to the wrong person. It helps ensure the following of your wishes. Is there a particular person or way the individual wants their assets divided? Is a specific person entitled to the house, car or a lump sum payment? One way to help ensure the assets allocations go smoothly is by having a written plan. Investors should not leave the dividing of their assets to chance or hope that everyone acts appropriately. What to Consider The main consideration of a beneficiary review is to evaluate every asset, not just the accounts that hold the bulk of the person’s wealth. This review starts with a person’s last will and testament and any trusts established for the estate. The assessment may include an individual retirement account (IRA), 401 (k) retirement funds, pensions, insurance policies, annuities, stocks, mutual funds, real estate and personal property. Ensure the beneficiary information is up-to-date, accurate and complete for every item. Things to Know Every portfolio warrants a review. Some people may think, “I don’t need to worry about my beneficiaries because I don’t have enough money to matter.” Regardless of the size of a person’s holdings, it is still wise to review beneficiary information annually. Planning the distribution takes the burden off family and friends to ensure the correct person receives their inheritance, even if the amount is modest. Ask questions. A beneficiary review is a perfect time to ask a trusted financial professional any questions on how to structure estate planning, set up trusts, distribute wealth to multiple heirs and other questions about estate planning. Educating yourself helps when managing your assets. Each year, conducting a beneficiary review is a good habit to adopt. Doing so may help preserve a person’s assets, help make sure the person or people the investor designates receive their inheritance and may help with the burden of managing assets by the individual’s loved ones. Take the time at least once per year, or any time when there are material changes in circumstances, to talk with a financial professional and decide the appropriate beneficiaries for every asset. Important Disclosures The opinions voice
Bonds
Wealth Management
The Private Trust Company, N.A. (PTC) is a wholly owned indirect subsidiary of LPL Financial Holdings Inc. PTC and LPL Financial have developed a strategic partnership to serve a growing number of independent financial advisors seeking to strengthen their wealth management offering by adding institutional trust services to serve, attract and retain more high-value and high net worth client relationships.

Accounting Services

Financial Planning
*Top RIA custodian (Cerulli Associates, 2019 U.S. RIA Marketplace Report); No. 1 Independent Broker-Dealer in the U.S (Based on total revenues, Financial Planning magazine June 1996-2020); No. 1 provider of third-party brokerage services to banks and credit unions (2020-2021 Kehrer Bielan Research & Consulting Annual TPM Report)
Retirement Planning
Because you’ve worked hard to create a secure and comfortable lifestyle for your family and loved ones, you’ll want to ensure that you have a sound financial plan that includes trust and estate planning. With some forethought, you may be able to minimize gift and estate taxes and preserve more of your assets for those you care about. An Estate Plan Needs Evaluation One of the first steps you’ll take in the estate planning process is determining how much planning you’ll need to undertake. No two situations are alike. And even individuals who don’t have a great deal of wealth require some degree of planning. On the flip side, those with substantial assets often require highly complex estate plans. Two key components of your initial needs evaluation are an estate analysis and a settlement cost analysis. The estate analysis includes an in-depth review of your present estate-settlement arrangements. This estate analysis will also disclose potential problems in your present plan and provide facts upon which to base decisions concerning alterations in your estate plan. For example, you may believe that your current arrangements are all taken care of in a will that leaves everything to your spouse. However, if you’ve named anyone else as a beneficiary on other documents — life insurance policies, retirement or pension plans, joint property deeds — those instructions, not your will, are going to govern the disposition of those assets. You want to ensure that all your instructions work harmoniously to follow your exact wishes. In addition, you may want to consider alternative asset ownership arrangements under certain circumstances. An estate plan that leaves everything to a surviving spouse enjoys the unlimited marital deduction against all estate taxes but fails to take advantage of the decedent spouse’s applicable exclusion amounts against estate taxes under federal and state law. This may result in a larger estate tax burden at the death of the second spouse. Yet these are taxes that can potentially be minimized with careful estate planning. While your spouse will receive your estate free of estate taxes if he or she is a U.S. citizen, anything your spouse receives above his or her federal applicable exclusion amount may eventually be subject to estate taxes upon his or her death.1 Many states also have their own estate tax regimes and apply different (lower) estate tax applicable exclusion amounts, which you will need to consider with your estate planning professional. An estate settlement cost analysis summarizes the costs of various estate distribution arrangements. In estimating these costs, the analysis tests the effectiveness of any proposed estate plan arrangement by varying the estate arrangement, the inflation and date of distribution assumptions, as well as specific personal and charitable bequests. Estate planning is very complex. And while a simple will may adequately serve the estate planning needs of some people, you sho
Annuities
How are trusts treated for federal estate, gift, and GST tax purposes? A trust is created when you (the grantor) transfer property to a trustee for the benefit of a third person (the beneficiary). The act of transferring property to a trust is generally treated no differently than if it were transferred to an individual outright. That is, transfers of property (whether into a trust or otherwise) may be subject to excise taxes known as transfer taxes. There are three types of transfer taxes: (1) estate tax, (2) gift tax, and (3) generation-skipping transfer (GST) tax. Estate tax may be imposed on transfers of property made after death (these are called bequests). Gift tax may be imposed on transfers of property made during life (these are called gifts). GST tax is imposed on transfers of property made to “skip persons.” A “skip person” is someone who is more than one generation younger than you (e.g., a grandchild or great-nephew). Estate taxation of trusts Trust property may be included in your gross estate for estate tax purposes if you have retained certain rights in the trust or if the trust is created at your death. The estate representative (executor) is responsible for filing an estate tax return on Federal Form 706 within nine months of your death (or at a later time if an extension is granted) and paying any estate tax owed from the estate proceeds. Grantor retained interest In general, a trust may be includable in your gross estate if you (the grantor) have retained an interest in the trust at the time of death — or given such interest away within three years of death. Such interests include: Life estate — A life estate is the right for life to (1) receive trust income, (2) use trust property, or (3) specify who gets to enjoy the trust income or use of trust property. If any of these rights are retained, the entire value of the property is includable in your gross estate. Reversionary interest — A reversionary interest means that the trust property will revert to you (the grantor) if the beneficiary does not survive you (i.e., dies before you). A reversionary interest is includable in your gross estate if, immediately before your death, the value of the interest exceeds 5 percent of the value of the trust. Rights of revocation — The right to revoke (i.e., terminate or end), amend, or alter the trust brings the trust back into your estate for estate tax purposes. “Incidents of ownership” in life insurance — The value of life insurance proceeds is includable in your gross estate if, either at the time of your death or within the three years prior to your death, the proceeds were payable to your estate, either directly or indirectly, or you owned the policy, or you possessed any “incidents of ownership.” “Incidents of ownership” is a legal term and means any right to benefit economically. Incidents of ownership include the right to change the beneficiary, the right to surrender or cancel the policy, the right t
Long Term Care
If you’re like many, you may associate long-term care with nursing homes and end-of-life care. But far more people will need long-term care in a crisis—an injury or illness that requires long-term care or rehab before you can live independently again. And while it’s important to make long-term plans for long-term care, crisis planning can be just as crucial when it comes to preserving your assets. Here we discuss three key differences between planning for long-term care and planning for a crisis. Crisis Planning Requires Flexibility—Long-Term Care Planning Provides It The unpredictable nature of crises can make them challenging to plan for. But in many ways, the process of planning for long-term care can also help you plan for crisis care. In other words, long-term care planning may involve Plans A, B, and C, while crisis care may require some combination of these plans and strategies. This allows you to borrow what you need and discard what you don’t. Long-Term Care Planning Can Benefit From a Trust If you’re wondering how you’ll be able to pay for long-term care for yourself and/or a spouse, you may assume Medicaid is off the table until you’ve spent down your assets. While this is generally true, there are certain types of trusts that allow you to benefit from the trust income for life without having trust assets “countable” for Medicaid purposes. Because assets belong to the trust instead of the individual, they’re excluded from the Medicaid calculation as long as they weren’t transferred within the look-back period. This period is five years in all states (including D.C.) except California, where the look-back period is two-and-a-half years.1 However, not all trusts are created equally. Before you create a trust of your own, talk to your financial professional and an experienced estate planning attorney to make sure the trust you select works well for your needs, assets, and wishes. Crisis Planning Needs a Strong Network A key part of crisis planning involves knowing who you can reach out to in times of need—including friends, loved ones, care providers, and even ombudspersons who can help you navigate the health care system. When you’re creating your crisis plan, think about who you may be able to lean on. Do you have loved ones who live near a care facility who can see you regularly?Is there anyone who can transport you to and from medical appointments?If you have pets, is there someone nearby who can take care of them or have them boarded until you’ve recovered?Do you have a medical or legal power of attorney that will allow a trusted loved one to make decisions on your behalf and pay bills if you’re incapacitated? By evaluating the strength and skills of your network, as well as the documents you have in place when an emergency occurs, you can gain a far better idea of who you should contact first and rely on in a crisis. Important Disclosures: The opinions voiced in this material are for general informati
Asset Management
The Private Trust Company (PTC) enables you to increase the scope of your practice while deepening client relationships. We bring extensive experience working closely with CPAs, tax professionals and accountants to provide administrative, asset management and custody services to individual, family, family office, business, and institutional clients.
Living Trusts
While a will is an important estate planning tool, it is not designed to offer certain protections available under a trust. One key difference between a will and a living revocable trust is that the living trust has an incapacity clause that states who you want to manage your affairs in the event you are unable to do so during your lifetime.
Charitable Remainder Trusts
A charitable remainder trust is an irrevocable trust with both income and remainder interests. Income is paid to designated beneficiaries for a term of years or lifetime. The remainder interest is paid to qualified charities as specified in the trust document when the trust terminates. Tax benefits can often be realized while maintaining a stream of income and providing for charities in the future.
Charitable Lead Trusts
In a charitable lead trust, the trust pays either a fixed percentage of assets of dollar amount to a qualified charity for either a set number of years or for the life or lives of the individuals. When the term of the trust has ended, the remaining assets are distributed to the donor or heirs as set forth in the terms of the trust. The tax benefits can often be realized while providing current benefits to charities and residual balances to heirs.
Asset Protection
In United States v. Windsor (2013), the U.S. Supreme Court struck down Section 3 of the federal Defense of Marriage Act (DOMA) which required that federal statutes, regulations, and rulings be interpreted as defining marriage as a “legal union between one man and one woman” and a spouse as “a person of the opposite sex who is a husband or a wife.” Then, in Obergefell v. Hodges (2015), the U.S. Supreme Court struck down every ban on same-sex marriage in the United States, including Section 2 of DOMA which provided that states have the right to deny recognition of same-sex marriages licensed in other states. As a result, same-sex marriages must now be recognized by every state and the federal government. If you’re in a same-sex marriage or about to get married, you’ll want to consider reviewing your estate planning goals, strategies, and documents with an estate planning attorney to determine whether changes are necessary. Civil unions and domestic partnerships During the period when same-sex marriages were not recognized universally throughout the country, some states created marriage equivalents such as civil unions and domestic partnerships. These laws varied, and there is now some reconsideration about the need for these laws. Other states (and the federal government) are not required to recognize these marriage equivalents as they are not legally marriages. For example, for federal tax purposes, marriage is not considered to include civil unions, domestic partnerships, and similar provisions. If you are in a civil union or domestic partnership, you might consider taking the next step to marriage. Transfer taxes When you transfer your property during your lifetime or at your death, your transfers may be subject to the federal gift tax, estate tax, and generation-skipping transfer tax (at a top tax rate of 40%). Your transfers may also be subject to state taxes. Federal gift tax You can make annual tax-free gifts of up to $16,000 per recipient. The amount can be doubled if you split gifts with your spouse. And while you can make deductible transfers to your spouse if you are married, transfers to your partner may be taxable if you are not married. However, you have a basic exclusion amount that protects up to $12,060,000 (in 2022, $11,700,000 in 2021) from gift and estate taxes. Federal estate tax As with the gift tax, you can make deductible transfers to your spouse, and you have the basic exclusion amount. When you die, your estate can elect to transfer any unused exclusion amount to your surviving spouse (a concept referred to as portability). Your surviving spouse can use your unused exclusion amount, plus his or her own basic exclusion amount, for gift and estate tax purposes. Portability is not available if you’re not married. If you’re married, you should review your estate planning documents to ensure that they properly provide for the marital deduction and applicable exclusion amount. Federal generation-skipping transfer

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