Trust Planning

When planning your estate or legacy strategy, it is essential to consider how putting some or all of your assets in a trust will affect both you and your beneficiaries. Trusts can be helpful in charitable giving, mitigating estate taxes, and protecting your estate from creditors, probate, and a multitude of other adverse situations

Gifting Strategies

A gift is a gratuitous transfer of property during a donor’s lifetime and may be appropriate for transferring assets that may appreciate. A donor can gift up to a value of the annual gift tax exclusion to each donee free of gift tax. The annual gift exclusion may help reduce the size of a taxable estate. Below are a few strategies you might consider in helping your clients through the estate planning process.

A Grantor Retained Annuity Trust (GRAT)

A Grantor Retained Annuity Trust (GRAT) is an irrevocable trust. The grantor places income-producing property but retains the right to a fixed stream of payments from the property for a specified term of years after which the property passes to the children/family.

A Qualified Personal Residence Trust (QPRT)

A Qualified Personal Residence Trust (QPRT) is a trust that holds the grantor’s primary or vacation home; the grantor retains the right to reside in the home for a term of years; after that, the house is transferred to the beneficiaries.

Private Split Dollar

Private Split Dollar arrangements can be set up between an insured and a trust to provide money that is not subject to estate taxes, probate, or creditors and on a basis that reduces or eliminates gift tax exposure. While there are variations (Family Split Dollar), in general, the insured pays most or all of the premiums, is entitled to the cash values, and most of the death benefits are paid to the trust for the family’s benefit.

Trust Planning

Revocable Trusts

A revocable trust (also known as a revocable living trust or inter vivos trust) is a trust that allows the trust maker (grantor) the ability to alter or cancel the trust. During the life of the trust, income earned is distributed to or used for the grantor’s benefit, usually only after death does property transfer to the beneficiaries. A revocable trust avoids the probate process and allows for the management of the assets in the trust.

Irrevocable Life Insurance Trust (ILIT)

An irrevocable life insurance trust is one in which the grantor completely gives up all rights in the property transferred to the trust and retains no rights to revoke, amend, terminate or modify the trust in any way. When an irrevocable trust holds a life insurance policy, usually on the grantor’s life, it is referred to as an ILIT.

Intentionally Defective Grantor Trust (IDGT)

An (IDGT) is an irrevocable trust in which the grantor or a member of the grantor’s family continues to hold some right, power, or benefit over the trust. These trusts are treated as though still owned or controlled by the grantor for income tax purposes. However, for estate tax purposes, the trust is treated as an entity separate from the grantor. The intentionally defective trust is created as a grantor trust with a purposeful “flaw.”

Grantor Trust

A grantor trust is a term that reflects that a trust is not a separate income tax entity from the grantor. See IDGT above. A revocable living trust is also a grantor trust during the lifetime of the grantor.

Generation-Skipping Transfer Trusts

A Generation-Skipping Transfer transfers property to a person(s) two or more generations below the donor. A trust is often used when a donor wants to pass property to grandchildren/great-grandchildren. It is subject to a Generation-Skipping Transfer Tax unless some permissible exemption/exclusion applies.

Spousal Limited Access Trust (SLAT)

A spousal limited access trust or spousal lifetime access trust (SLAT) is an irrevocable trust established by one spouse for the benefit of the other and the couple’s children and grandchildren. The transfer of assets by the spouse establishing the trust is considered a gift and will use some or all of the individual’s gift tax exemption. The assets and their future appreciation can eventually pass to children, grandchildren, or future generations free of the estate tax. A SLAT can be drafted with several provisions that may allow the trustee to allocate trust assets to your client’s spouse, and those distributions can be done before other beneficiaries. A SLAT can be designed so that the trustee is not allowed to disperse to other beneficiaries while your client’s spouse is alive. Therefore, the trust document is written to allow for distributions to their spouse to meet their needs.

Special Needs Planning

People with special needs have life care planning needs that require a financial professional who understands the intricate tax law, trust law, and government programs that impact a person’s care with special needs. 

Gift of a Lifetime

Offers a way for parents and/or grandparents using a portion of their annual gift exclusions, to help secure a promising financial future for their children and/or grandchildren.

Understanding Your Estate: Critical Elements of an Estate Planning Strategy

Establishing an estate planning strategy is crucial, yet many wait too long to put their wishes in writing. Use this helpful guide to review your estate strategy and start conversations with your loved ones, financial professionals, and legal team.

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