Giving the money outright isn't the only, or even necessarily the best, approach. The right strategy in many cases is to put the gift into a trust, rather than giving the recipient the cash in hand.
Lauren Y. Detzel, chairman of the estate and succession-planning department at Dean, Mead, Egerton, Bloodworth, Capouano & Bozarth, said there are "lots of different ways" of doing this, using grantor retained annuity trusts, discounted gifts in trust and other kinds of trusts.
Some who see the big tax opportunity but wince at the prospect of parting with millions of dollars may decide to make the gift to a multigenerational trust that includes a spouse as potential beneficiary. That way, money could flow back into the household in case times eventually get tighter than anticipated.
Copyright (c) 2011, Dow Jones. For more information about Dow Jones' services for advisors, please click here.