Use Trusts for Advanced Plans

Trusts can be designed to compliment and enhance the asset protection, estate planning, tax saving, and privacy goals which you have. The following is a summary of a few of the trust options available.

Revocable Living Trust
Property in a trust is not subject to probate fees and delays. Trust assets pass instantly to designated family members. A revocable living trust is a popular format for avoiding probate and carrying out basic estate planning strategies.

Limited Term Trust
Property can be placed in trust for a designated term of years. The support or educational needs of a child or other family member can be satisfied from trust income or principal. Assets can be protected from potential claims during the period of the greatest liability. The property can be returned to you for retirement or other needs at a later period in your life—when you are no longer working and your liability concerns are diminished. One good strategy is to place FLP limited partnership interests in this type of trust.

Life Insurance Trust
Insurance is used to provide adequate funds for family living expenses; cash to meet business liquidity needs and necessary amounts to pay estate taxes—without a loss of accumulated savings. To avoid estate taxes of up to 55 percent on the insurance proceeds, a Life Insurance Trust must be used to hold the policy. Amounts transferred into this plan have the added advantage of building cash value free of income tax and fully protected from any lawsuits or claims against you.

Estate Freeze Trust
Investments that are likely to appreciate in value should be moved into the Estate Freeze Trust. Real estate, stocks, and ownership in a new business venture are often used to fund these trusts. Amounts up to the exemption amount can be transferred without gift tax. This amount plus future increases in value—perhaps millions of dollars—can escape taxation with the proper planning.

Personal Residence Trust
Your largest source of savings may be the equity in your home. A loss would be disastrous from an emotional as well as a financial standpoint. You need to protect your home—but at the same time preserve the tax benefits of the mortgage interest deduction and the ability to avoid gain on the sale. The Personal Residence Trust is an excellent technique for accomplishing asset protection without losing the unique tax advantages of home ownership.

Privacy Trust
Privacy for what you own may be an important issue to you. When others can easily locate your bank accounts and real estate, dangers are created. Lawsuits and claims against you are encouraged when you hold property in an accessible and unprotected form. A Privacy Trust can be created which will allow you to hold bank and brokerage accounts and real estate without revealing your ownership. You can control the information about yourself which is available to others. The Privacy Trust can be combined with a Family Limited Partnership or LLC to satisfy asset protection as well as privacy concerns.

Offshore or Asset Protection Trust
The Offshore or Asset Protection Trust (APT) acts as a safety valve—providing the ability to move funds into an overseas trust account—shielded by favorable asset protection and bank secrecy laws. The APT opens up the world of offshore planning opportunities for sophisticated individuals who are willing to bear some additional expense for the enhanced options which are presented. Because it provides great legal and practical flexibility, the APT is often an important component of a complete estate and asset protection plan.