A transfer to which account will NOT result in a future interest gift for tax purposes?

When considering which account will not result in a future interest gift for tax purposes, the correct answer is a GRAT (Grantor Retained Annuity Trust). A GRAT is designed to allow a grantor to transfer assets while retaining the right to receive an annuity payment for a specified term. At the end of that term, the remaining assets in the trust are transferred to the beneficiaries.

For tax purposes, the value of the gift to the beneficiaries is calculated based on the present value of the future interest they will receive, not the assets transferred into the trust. Therefore, during the term of the GRAT, the beneficiaries do not have an immediate ownership interest in the assets, and thus, it is not considered a future interest gift for the purposes of gift tax.

In contrast, both Qualified tuition plans and 529 plans are structured to allow contributions to be made for the benefit of a designated beneficiary, and those contributions may be considered gifts for tax purposes when made, though there are specific provisions that can allow for gift exclusion. An UGMA (Uniform Transfers to Minors Act) account designates a minor as the owner of the assets with an expectation that they will benefit from those assets, typically resulting in a future interest gift as well.