The Dynasty Trust is a popular strategy used to avoid or minimize estate taxes. I can tell you that as an estate lawyer, many states have recently adopted legislation (abolishing the Rule against Perpetuities) to encourage Dynasty Trusts, which effectively eliminate legal restrictions on the period of years that a trust may last. Now, in these twenty-three states, a trust is permitted to exist for whatever term is chosen—even if it reaches far off generations many years in the future. In Nevada, a Dynasty Trust is permitted to last for up to 365 years. Who might want a trust lasting generations into the future?
Estate plans are typically designed to include some type of trust to take care of the needs of minor children upon the death of the parents—usually lasting until the ages of twenty-one or twenty-five or so. It makes sense to limit the term to this relatively short period of time when the trust fund contains an amount that the child might exhaust for basic living needs or for the expenses of college and higher education. If there is not going to be anything left over after covering the child’s basic needs, an extended term trust would not make sense.
It is a different matter when family wealth consists of substantial accumulated savings, a valuable business, or a large insurance policy. In these cases, the issue of how long a trust should last assumes much greater significance and specific questions must be addressed. At what age do we want a child to receive a full distribution of substantial trust funds? Should we make large sums of money available to the child when he is young or do we want to control and limit the distributions based on whatever standards we can define for need, responsibility, and maturity? These are not easy questions to answer, especially for children who are young when the trust is formed.
The answer to the question of how long the trust should last is often based on two key considerations—the estate tax consequences of the plan and the possible need for asset protection.
Offshore Tax Havens
Like all businesses with attractive profit opportunities, offshore havens must compete with each other to attract a volume of banking and financial services clients. This was not always the case. Only twenty years ago a few well-known centers such as the Bahamas, Bermuda, the Cayman Islands, and Switzerland were the predominant service providers in this area.
Within the last ten years, many new countries have developed the necessary package of banking services and asset protection products. There are now a significant number of countries seeking this business, and competition is fierce. Successful countries attract this business with some or all of the traditional techniques: better service, innovative products, favorable laws and regulations, and competitive prices. When a particular country develops a financial product that satisfies a wide demand, it may leapfrog over its competitors to the top ranks of the financial centers.
Asset Protection with an LLC
An LLC is not required to maintain formal minutes and resolutions. Record keeping requirements can be minimized without a threat that the members will be sued individually for a liability of the company. Contrast this treatment with that of a corporation. If the proper formalities are not followed, the corporate protection will be pierced and the owners will have liability for company obligations. The LLC law is specifically intended to remedy this problem by providing that the entity cannot be pierced because of a failure to maintain any of the corporate type documents.
Free Consultation with an Estate Lawyer
If you are here, you probably have an estate issue you need help with, call Ascent Law for your free estate law consultation (801) 676-5506. We want to help you.
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West Jordan, Utah
84088 United States
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