14 Nov How can I give a money gift in secret?

Q. How can I give a gift without the person getting the gift knowing it’s from me? Can I give with it a requirement that they do something specific with the money?
— Shhhh!

A. This is very generous of you.

There are several ways to give a gift in secret, but you’ll need some legal help.

One method is to make the gift into a trust, said Lisa Factor Fox, a trusts and estates attorney with Mandelbaum Salsburg in Roseland.

She said normally, the grantor — the person who creates the trust — is the same as the person making the gift to the trust. If the donor — the person making the gift — wants anonymity, the donor might make a gift to a trust created by someone else, whether or not the named grantor actually contributed to the trust, she said.

“However, in New Jersey, a trustee must provide a copy of the trust agreement to the beneficiary upon request,” she said. “Thus, the identity of the donor could still come to light in an accounting or report provided by the trustee to the beneficiary.”

For further identity protection, one might create and fund an LLC and have the LLC make the gift to the trust, she said.

A trust has the further benefit of limiting the use of the gifted funds through specific instructions to the trustee.

Trusts can, and often do, provide restrictions or directions on the use of trust funds for the benefit of the beneficiary, Fox said.

“Directing that the trust funds be made available for the education of the trust beneficiary is not uncommon,” she said. “Of course, trusts and LLCs are legal entities, and the implications of creating and managing them, as well as the income tax and gift tax consequences of such a gifting transaction, should be well understood before undertaking these transactions.”

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This story was originally published on Nov. 14, 2019.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.