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In California, custodial accounts can be disposed of by the beneficiary at age 18. However, by being the GP, although your kids can sell their limited partner's interests at 18 to third parties, they probably will not be able to since the interests are not truly marketable. However, the second part of the strategy is not the best. First, if your kids need cash for education, you can just cut the check directly to the school and this will not even count towards the $10,000 annual exclusion (direct payments to educational providers are not part of the $10,000). Also by buying their interests, you leave yourself with more of the interests, therefore increasing your taxable estate. You should set up a "FLP," I can refer you to other sites if you email me at neal99@yahoo.com. Also, you will want to take advantage of "discounts" when you make gifts, which will probably require getting an appraisal of partnership intersts. Let me know if you need more info. |
