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Preserve, Protect and Perpetuate Wealth

You’ve worked hard to provide for yourself and your family and make your future more secure. Without advanced estate planning strategies, much of the significant assets you have accumulated may be lost to federal estate taxes.

Generational Strategies Group regularly assists affluent clients with sophisticated planning strategies. Some of the tools and techniques that we use for our clients include:

  • Asset Titling & Ownership
  • Annual Gift tax Exclusion Gifting
  • Charitable Lead Annuity Trust (CLAT)
  • Charitable Lead Unitrust (CLUT)
  • Charitable Remainder Annuity Trust (CRAT)
  • Charitable Remainder Unitrust (CRUT)
  • Domicile Planning
  • Durable Power of Attorney
  • Dynasty Trust
  • Family Foundation
  • Family Limited Liability Company (FLLC)
  • Family Limited Partnership (FLP)
  • Generation Skipping Trust
  • Grantor Retained Annuity Trust (GRAT)
  • Grantor Retained Interest Trust (GRIT)
  • Grantor Retained Unitrust (GRUT)
  • IRA Maximization
  • Irrevocable Life Insurance Trust (ILIT)
  • Intentionally Defective Grantor Trust (IDGT)
  • Lifetime Gift Tax Exemption
  • Pour-over Will
  • Private Annuities
  • Qualified Personal Residence Trust (QPRT)
  • Revocable Living Trust
  • Self-Canceling Installment Notes
  • Taxable Gifts
  • Valuation Discounts

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Dynasty Trusts

Traditionally, family wealth is taxed at the end of every generation. This means that assets transferred from parents to their children will be subject to estate taxes as part of the children’s estates at the death of each child. A way to protect your children’s inheritance from being subject to this re-taxation is by creating a Dynasty Trust to hold the assets left to each child. In fact, by creating a Dynasty Trust, also known as Legacy Trusts or Generation Skipping Trusts, a parent can allow his or her assets to pass through to subsequent generations without incurring an estate tax at the death of the trust’s beneficiary on the exempt portion of the trust’s assets.

The savings to future heirs and beneficiaries can be significant.

Dynasty Trusts Provide the Following Benefits and Protections

Generational Strategies Group works with your attorney and tax advisor to create and design Dynasty Trusts to meet your unique estate planning and asset protection needs.

1. Protection from Creditors

The assets in a Dynasty Trust are protected from creditors or judgments arising from liabilities like car accidents and other lawsuits. If your children are sued, the inheritance you leave to them will receive greater protection from creditors if those assets are held in a Dynasty Trust for their benefit rather than if they owned the assets outright.

2. Protection from Divorce

Assets held in Dynasty Trusts are protected from division in divorce proceedings and cannot be attached by your children’s spouses.

3. Protection from Incapacity

If your child or children become incapacitated the assets held in the Dynasty Trust will be managed by the successor trustee you’ve appointed without the necessity of a costly court conservatorship.

4. Protection from Probate

When the beneficiary of a Dynasty Trust dies, the assets held in the trust can pass to your next generation of heirs and beneficiaries without the necessity of an expensive and time-consuming probate proceeding through the Superior Court system.

5. Dynasty Trusts Are Not Just for People with Grandchildren

There is a common misconception that a Dynasty Trust can only be created by people who have grandchildren. However, this is not true. Anyone who is interested in protecting the assets they leave to beneficiaries in future generations from estate taxes, creditors, divorce, conservatorships, and probates, may do so by creating a Dynasty Trust to protect the beneficiaries during the beneficiaries’ lifetimes. The creator of the trust can then appoint who they want to inherit the trust assets after the beneficiaries pass away. Grandchildren or great-grandchildren are not required and do not have to be the trust beneficiaries. A Dynasty Trust is a valuable estate planning strategy that can be created by anyone who wants his or her beneficiaries to enjoy significant tax savings and to preserve what they leave behind for the benefit of generations to come.

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Family Limited Liability Companies

Family Limited Liability Company (FLLC or Family Limited Partnership) may be used to transfer assets including investment securities, business interests, and real estate investments among family members at a reduced value for federal gift tax purposes while effectively retaining control over such assets. An added benefit is that the Family Limited Liability Company may serve as an asset protection vehicle.

One of the most attractive features of the Family Limited Liability Company is the concept of valuation discounts. Although an asset may otherwise carry full fair market value, the transfer of a member unit typically results in a minority interest. In addition, non-managing members, have no control over the Family Limited Liability Company and the underlying property. Therefore, the transferred interest is typically discounted by as much as 30 to 40 percent or more when valuing the transfer for federal gift or estate tax purposes.

The formation of a Family Limited Liability Company or Family Limited Partnership requires careful planning discussed with one of Generational Strategies Group’s experienced estate planners in order to achieve the benefits that are available.

Irrevocable Life Insurance Trusts

There is a common misconception that life insurance proceeds are not subject to federal estate taxes. While the proceeds are received by your beneficiaries free of any income taxes, they are included as part of your taxable estate and therefore your beneficiaries may lose some value of the proceeds to estate taxes.

An Irrevocable Life Insurance Trust (ILIT) is created specifically for the purpose of owning your life insurance policy. A properly established and administered trust holds the policy outside of your estate and keeps the proceeds from being taxable to your estate. The proceeds from the insurance policy can then be used to provide your estate with the liquidity to pay estate taxes, pay off debts, pay final expenses and provide income to a surviving spouse, partner, or children. The ILIT will be the policy owner and beneficiary. Once your insurance trust is established, you use your annual gift tax exclusion to make cash gifts to your trust. Your beneficiaries forgo the present cash gift, but will receive much greater future proceeds, and the trustee uses the cash gift to pay the premium on the life insurance policy.

There are many options available when setting up an ILIT. For example, ILITs can be structured to provide income to a surviving spouse or partner with the remainder going to your children or other beneficiaries. You can also provide for distribution of a limited amount of the insurance proceeds over a period of time to a child who has difficulty managing financial matters. This estate planning strategy offers asset protection benefits as well.

Generational Strategies Group works in a collaborative team approach with your insurance professionals in establishing and designing ILITs to meet your estate planning goals and objectives.