USA Law and Practice Contributed by: Diana Zeydel, Marc Selden, Benjamin Babcock and Brian Smith, Greenberg Traurig, LLP
Prenuptial and Postnuptial Agreements Prenuptial and postnuptial agreements are generally valid and enforceable in all US states if executed vol - untarily, free from duress and with full and fair financial disclosure. Courts may consider whether each party had independent legal counsel and sufficient time to review the terms. Valid agreements can address property rights, alimony and inheritance rights, and are commonly used to clarify expectations and avoid future disputes. These agreements are generally not permitted to control obligations with respect to chil - dren of the marriage. 2.5 Transfer of Property In the US, the tax basis of property depends on whether the transfer occurs during life or at death. If property is transferred during life, the recipient gener - ally receives a carry-over basis, meaning they take the same cost basis as the donor. Special rules apply if the property is encumbered. If property is transferred at death, the recipient typical - ly receives a basis adjustment to the fair market value as of the decedent’s date of death. The basis adjust - ment applies only to assets included in the decedent’s taxable estate and does not apply to items classified as income in respect of a decedent, like retirement accounts or unpaid compensation. Several separate property states allow married cou - ples to create community property trusts. Assets held in these trusts may receive a basis adjustment to fair market value on the death of the first spouse, offer - ing a valuable planning opportunity to reduce capital gains tax on low basis assets. 2.6 Transfer of Assets: Vehicle and Planning Mechanisms The US offers planning tools to facilitate the transfer of assets to intended beneficiaries in a tax-efficient or tax-free manner. Intentionally Defective Grantor Trust (IDGT) One common strategy is the use of an intentionally defective grantor trust (IDGT). This type of irrevocable trust allows the grantor to transfer appreciating assets using the transferor’s lifetime gift tax exemption. The trust assets appreciate outside the taxable estate, and
the grantor continues to pay the income tax, which further reduces their estate. Grantor Retained Annuity Trusts (GRATs) GRATs are used to pass appreciation to beneficiaries with little or no gift tax. The grantor receives annuity payments for a set term, and, generally, any growth beyond the IRS-assumed rate of return passes to the beneficiaries of the GRAT gift tax-free. If the settlor dies during the annuity term, the assets of the GRAT may be wholly included in the settlor’s gross estate for estate tax purposes. Charitable Lead Trusts (CLTs) and Charitable Remainder Trusts (CRTs) CLTs and CRTs are split-interest trusts that combine charitable giving with family wealth transfers. These structures may reduce the taxable value of the gift and provide a charitable income tax deduction. Given the charitable nature of these trusts, complex rules applicable to private foundations apply to the admin - istration of a CLT or a CRT. For 2026 planning, charitable strategies might account for new income tax deduction limitations, including a 0.5% AGI floor for itemised charitable deductions and a reduced tax benefit for taxpayers in the top federal bracket. These changes may make timing, bunching and vehicle selection – whether as direct gifts, donor- advised funds, CLTs or CRTs – more important. Qualified Personal Residence Trusts (QPRTs) QPRTs allow a personal residence to be transferred at a discounted value while the grantor retains the right to live in the home for a set term. After the term, the property passes to beneficiaries, often with significant gift tax savings. Like a GRAT, a QPRT remains wholly includible in the settlor’s gross estate if the settlor does not survive the term. If the settlor wishes to continue to occupy the residence after the term has expired, fair market value rent would need to be paid. 2.7 Transfer of Assets: Digital Assets Digital assets (including email accounts, social media profiles and cryptocurrency) are becoming an increas - ingly important component of individuals’ estates. Incorporating these assets into succession planning
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