Jonathan Blattmachr's Mindboggling Trusts

Will more people with eight-or-nine-figure net worths (a somewhat limited market) set up trusts that take advantage of this year's extraordinarily generous federal gift tax and GST exemptions?

Jonathan Blattmachr, the noted tax-planning guru, is not letting the opportunity go to waste. According to Paul Sullivan in The New York Times, Blattmachr has created what could prove to be an estate-planning masterpiece.

[Blattmachr] has structured trusts with his wife, Betsy, that are so complex they boggle the mind. They enable the Blattmachrs to take advantage of the current exemptions and gift money today to reduce future estate taxes. But he has structured the trusts, which each hold about $4 million, in such a way that they have a built-in safety valve if something goes wrong: they can get the money back.

Could the IRS consider the trusts a shell game and deny the Blattmachrs' tax savings? Time may tell.