Estate Planning Also Has Its Trends
Estate planning, like pretty much everything else in life, is subject to trends, as pointed out recently by the website wealthmanagement.com.
The article serves as another means of advising that estate plans are far from static, but must keep up with changing times and changing laws.
The website article focused on four of these emerging trends.
They were:
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Self-settled trusts. “The sizes of the gift and generation-skipping transfer tax exemptions, $5.34 million each, have resulted in the increased popularity of self-settled trusts. Currently, 15 states allow for self-settled trusts, and 14 of these states also allow for dynasty trusts. Grantors are more comfortable with self-settled trusts because grantors can also be a permissible beneficiary of an irrevocable trust that they establish for their family. As long as there’s no pre-existing understanding or arrangement between the grantor and the trustee, the assets aren’t transferred fraudulently, and there are no exception creditors.”
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Discretionary Interests. “Another trend deals with discretionary interests and spendthrift clauses. It emanates from the recent Casselberry case in Florida, in which the court stated: ‘ … if disbursements are wholly within the trustee’s discretion, the court may not order the trustee to make such disbursements. However, if the trustee exercises its discretion and makes a disbursement, that disbursement may be subject to the writ of garnishment.’ As a result of this case, Florida lawyers are seeking a solution for similar third-party discretionary trusts.”
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State Income Taxes. “Another key development is state income taxes as they relate to trusts. There are many different state income tax models for taxing trusts. Rising state income taxes have also resulted in an increased interest in private placement life insurance, providing investment flexibility as well as a mechanism for tax-free deferral and withdrawals.”
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Foreign Grantor Trusts. “Up until recently, foreign families set up trusts in the United States only if they owned real estate and/or had green card/citizen children and/or grandchildren in the United States. These international families are now establishing U.S. situs trusts, even if they have no ties to the United States. These vehicles are typically foreign grantor trusts with U.S. trustees, generally holding an offshore entity, which in turn holds the offshore property. If there’s not any U.S. property, there’s no U.S. tax.”
