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Unlocking Estate Planning Strategies for CACI International Employees: The Benefits of Intentionally Defective Grantor Trusts

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BBB Update

Key individual tax changes from Trump's 'big beautiful' bill
Current law vs. final legislation

Current law Final legislation
Standard deduction
$15,000 single; $30,000 married filing jointly for 2025 $15,750 single; $31,500 married filing jointly for 2025
'Bonus' deduction for older adults
$1,600 for age 65 and older for 2025; $2,000 unmarried / not surviving spouse for 2025 $7,600 for age 65 and older; $8,000 for unmarried / not surviving spouse; both from 2025 through 2028
State and local tax deduction (SALT)
$10,000 limit through 2025 $40,000 limit for 2025; increases by 1% through 2029; reverts to $10,000 in 2030
Child tax credit
Max credit of $2,000 per child through 2025; refundable portion $1,700 for 2025 Max credit of $2,200 per child; refundable portion $1,700 for 2025
Estate and gift tax exemption
$13.99 million single; $27.98 million married filing jointly for 2025 $15 million single; $30 million married filing jointly for 2026
Tax on tips
N/A Deduct up to $25,000 per year from 2025 though 2028
Overtime pay
N/A Deduct up to $12,500 per taxpayer from 2025 through 2028
Auto loan interest
N/A Deduct up to $12,500 per taxpayer from 2025 through 2028
Auto loan interest
N/A Deduct up to $10,000 of annual interest on new loans from 2025 through 2028
Trump Accounts for child savings
N/A One-time $1,000 credit to account per child born between 2025 through 2028
Charitable deduction for non-itemizers
N/A after 2021 $1,000 single; $2,000 married filing jointly; permanent after 2025

Source: CNBC

The prudent distribution and conservation of assets for future generations are critical in the field of wealth management and estate planning, particularly in light of the intricate tax consequences for large estates. Making sure that, as CACI International employees, your assets—whether they be cash, investments, or real estate—are transferred to specified beneficiaries in the most tax-efficient way possible is the cornerstone of successful estate planning. This includes reducing the effect of gift and estate taxes in order to protect the financial legacy that one hopes to leave behind.


One of the most important aspects of advanced estate planning is the use of trusts as means of accomplishing a variety of planning goals for CACI International individuals. However, gift tax obligations may arise if significant assets or big quantities of money are transferred into these trusts right away. Conventional methods like sprinkling, Crummey power, or five-and-five power might provide answers, but because of their unique drawbacks and complexity, they aren't always the best.

Creating an Intentionally Defective Grantor Trust (IDGT) is a particularly smart approach. By taking advantage of tax laws to the estate planner's advantage, this trust structure is intended to get around the disadvantages of direct asset transfers. The IDGT is based on the idea that although while assets placed in the trust are not included in the grantor's taxable estate for gift, estate, and generation-skipping transfer taxes, the grantor is nonetheless liable for paying income taxes on the income these assets produce. Due to this unusual setup, which makes the trust 'defective' for tax purposes, the value of the assets held in the IDGT increases without extra gift taxes being paid, allowing the assets to appreciate tax free.

The irreversible nature of the IDGT and its distinct tax treatment are what define it. For gift and inheritance tax reasons, assets deposited into the trust are almost undetectable to the Internal Revenue Service (IRS); yet, the grantor is taxed on the income these assets generate. The beneficiaries of the trust gain from this arrangement because development within the trust is made possible without incurring gift taxes thanks to the grantor's payment of income taxes on trust revenues. Moreover, as long as the transactions are carried out at fair market value, the trust is fiscally efficient because neither capital gains taxes nor gift taxes are applied to the transactions.


The relevance of IDGTs to CACI International employees is highlighted by the possibility of lowering the estate tax lifetime exemption from $13.61 million in 2024 to as low as $7 million, given the impending expiration of the Tax Cuts and Jobs Act in 2026. In order to lessen the increasing tax burden on large estates, this shift would raise the necessity for thoughtful estate planning.

Limited partnership interests and other assets that might take advantage of valuation discounts are particularly beneficial when deciding which kinds of assets to include in an IDGT. These discounts, which can vary from 35 to 45 percent, are based on the fact that these assets have limited control and market liquidity, which lowers the gift's taxable value and maximizes tax savings.

A direct gift and an installment sale are frequently used in tandem when transferring assets into an IDGT. This plan facilitates the gradual transfer of wealth in a tax-efficient manner and allows the grantor to efficiently take advantage of valuation discounts. The usefulness of this planning tool is demonstrated by the example of a wealthy person who uses an IDGT to leave a sizable amount of their estate to their children while also making sure they have enough cash on hand to pay any estate taxes by purchasing life insurance.

The purpose of the 'intentional defectiveness' of the trust is to keep the assets out of the grantor's taxable estate by having the grantor pay income taxes on trust revenues even though they are not theirs. This arrangement provides a strong answer to the problem of estate tax liability in addition to increasing asset growth within the trust for the benefit of the grantor's beneficiaries.

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The assets in the IDGT transfer to the beneficiaries estate tax-free upon the grantor's death, provided they have not been sold and are not included in the grantor's taxable estate. This feature enables a future inheritance tax liability reduction while preserving the grantor's spouse's access to the assets through the possible incorporation of a spousal lifetime access trust (SLAT) inside the estate plan.

To sum up, the Intentionally Defective Grantor Trust is a fundamental component of sophisticated estate planning, providing a sophisticated and successful approach to the generational transfer and preservation of wealth. As these trusts are complicated and the tax regulations governing them are complex, it is essential to get the advice of a professional financial planner, accountant, or estate-planning attorney. CACI International employees can guarantee the lasting legacy of their estates, reduce tax obligations, and maximize the financial advantages left to their descendants by carefully structuring and utilizing IDGTs.

In order to increase their estate planning in 2024, CACI International individuals want to take into account the possible advantages of making Qualified Charitable Distributions (QCDs) from their Individual Retirement Accounts (IRAs). QCDs permit direct gifts to qualified charities of up to $100,000 annually for individuals 70½ years of age and above, without the distribution being counted as taxable income. This approach minimizes Medicare Part B and Part D premiums and lowers Adjusted Gross Income (AGI), which may lessen the tax burden on Social Security benefits and promote charitable objectives. This method is in line with wealth transfer tactics that minimize taxes, making it especially attractive to retirees and those making retirement plans. 

Think of your riches as a valuable, vintage wine collection that you would like to leave for your family. Intentionally Defective Grantor Trusts (IDGTs) function as sophisticated asset storage, much how climate-controlled wine cellars help maintain the quality and worth of wine over time. This cellar, designed with the ideal circumstances (tax techniques), guarantees that your money (collection) evolves flawlessly, increasing its value without losing a penny to needless taxes. You can preserve your wine and pass it on to future generations at its best condition without having to pay the customary estate and gift taxes by moving it into this dedicated cellar. The same way a wine enthusiast painstakingly organizes the growth and maintenance of their collection, you too need to carefully arrange the transfer of your wealth to make sure it works best for your family and is preserved and grown until it's time to enjoy it.

What type of retirement savings plan does CACI International offer to its employees?

CACI International offers a 401(k) Savings Plan to help employees save for retirement.

How can I enroll in the CACI International 401(k) Savings Plan?

Employees can enroll in the CACI International 401(k) Savings Plan through the company’s HR portal or by contacting the HR department for assistance.

Does CACI International match employee contributions to the 401(k) plan?

Yes, CACI International provides a matching contribution to the 401(k) plan, which helps employees increase their retirement savings.

What is the maximum contribution limit for the CACI International 401(k) Savings Plan?

The maximum contribution limit for the CACI International 401(k) Savings Plan is determined by the IRS guidelines, which are updated annually.

Can I change my contribution rate to the CACI International 401(k) Savings Plan at any time?

Yes, employees can change their contribution rate to the CACI International 401(k) Savings Plan at any time, subject to certain restrictions.

What investment options are available in the CACI International 401(k) Savings Plan?

The CACI International 401(k) Savings Plan offers a variety of investment options, including mutual funds, stocks, and bonds.

When can I access my funds from the CACI International 401(k) Savings Plan?

Employees can access their funds from the CACI International 401(k) Savings Plan upon reaching retirement age, or in cases of hardship, as defined by the plan.

Does CACI International allow for loans against my 401(k) savings?

Yes, CACI International allows employees to take loans against their 401(k) savings, subject to specific terms and conditions outlined in the plan.

What happens to my CACI International 401(k) Savings Plan if I leave the company?

If you leave CACI International, you can either roll over your 401(k) savings into another retirement account, cash out, or leave the funds in the plan, depending on the balance.

Is there a vesting schedule for the CACI International 401(k) Savings Plan?

Yes, CACI International has a vesting schedule for employer contributions, which determines how much of the employer match you can keep if you leave the company.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.
CACI International has announced a restructuring plan involving significant layoffs and a shift in its benefits structure. The company is consolidating certain operations and focusing on high-growth areas. This move is part of a broader strategy to enhance operational efficiency and adapt to changing market conditions.
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For more information you can reach the plan administrator for CACI International at 1100 North Glebe Road Arlington, VA 22201; or by calling them at +1 703-841-7800.

*Please see disclaimer for more information

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