Most retirement and wealth strategies focus on maximizing pre-tax wealth.
What ultimately matters, however, is how much of that wealth can be spent and enjoyed after taxes.
Tontine Trust Funds are designed to help members maximize lifetime spending from their wealth. Tax efficiency can play an important role in achieving that objective.
Potential for Tax-Efficient Lifetime Spending
Under current U.S. federal tax law, gains on assets held for more than one year generally qualify for long-term capital gains treatment.
For 2025, taxpayers may realize long-term capital gains within the following thresholds before becoming subject to federal capital gains tax:
| Filing Status | 0% Federal Capital Gains Rate Applies Up To |
|---|---|
| Single | $48,350 taxable income |
| Married Filing Jointly | $96,700 taxable income |
| Head of Household | $64,750 taxable income |
The examples on this page assume:
• Trust assets have been held for more than one year and qualify for long-term capital gains treatment.
• The member has no other capital gains.
• The member has no material investment income outside the Trust.
• The member's income remains below the Net Investment Income Tax (NIIT) thresholds.
• Current federal tax law remains unchanged.
Under these assumptions, gains realized up to the thresholds shown above may qualify for the 0% federal long-term capital gains rate. In addition, assuming the member's income remains below the NIIT thresholds, the 3.8% Net Investment Income Tax would not apply. The NIIT thresholds are currently $200,000, $250,000 and $125,000 respect for those filing as Single, Married Filing Jointly or Married Filing Separately.
These figures are intended to illustrate the level of annual gains that may potentially be realized before federal capital gains tax becomes payable under the stated assumptions. Actual tax outcomes depend on a member's individual circumstances, total income, deductions, filing status, state of residence and future changes in tax law. Actual tax outcomes depend on the member's total income, deductions, filing status and individual circumstances.
Estate Inclusion And Basis Treatment
For U.S. members, the Trust is intended to be structured and administered so that Trust Property attributable to a deceased member is expected to be included in that member's gross estate for U.S. federal estate tax purposes.
The Trust documentation further contemplates administration on the assumption that Trust Property receives a fair market value basis adjustment upon death, although this treatment is expressly described as intended rather than guaranteed.
Members should consult their own tax advisors regarding the application of these provisions to their individual circumstances.
No Tax Advice
Tontine Trust does not provide tax, legal, accounting or financial advice.
The information on this page is provided solely for educational purposes and should not be relied upon as tax advice.
Members should consult their own professional advisors before making decisions regarding contributions, distributions, estate planning or tax reporting.