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Romney’s Estate Plan: Can YOU Dig It??

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In January 1999, a trust set up by Mitt Romney for his children and grandchildren reaped a 1,000 percent return on the sale of shares in Internet advertising firm DoubleClick Inc.

If Romney had given the cash directly, he could have owed a gift tax at a rate as high as 55 percent. He avoided gift and estate taxes by using a type of generation-skipping trust known to tax planners by the nickname: “I Dig It.”

All politics aside, one could learn a thing or two from Mitt Romney’s estate planning when it comes to transferring wealth. One particularly interesting instrument he made use of was the “Intentionally Defective Grantor Trust,” or IDGT.

Romney and his use of the IDGT (accordingly pronounced, “I DiG IT,” if you aren’t into spelling out your acronyms) were the subject of a recent article in Bloomberg News titled “Romney ‘I Dig It’ Trust Gives Heirs Triple Benefit.”

A popular wealth transfer strategy among estate planning attorneys, the IDGT provides a “triple benefit” to taxpayers who employ it. The key, as with so many wealth transfers, is to place unappreciated assets in an IDGT and thereby shelter them as they grow. If the assets then appreciate in the IDGT, then the transfer will ultimately maximize the wealth transferred and minimize the attending taxation.

Check out the original article to learn more about this popular IDGT strategy, and contact your estate planning attorney to see if the IDGT is right for you and your loved ones.

You can learn more about  estate tax planning  on our website. Be sure to sign up for our complimentary e-newsletter to stay abreast of issues like these that could affect you, your loved ones and your estate planning.

Reference: Bloomberg (September 27, 2012) “Romney ‘I Dig It’ Trust Gives Heirs Triple Benefit

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