For any estate plan that includes a trust, the appointment of the trustee for the trust is of critical importance to the successful administration of the trust. Often, the grantor will appoint family members to act as the trustee, but this may not always be the best choice.
The reciprocal trust doctrine is a critical consideration in estate planning for high-net-worth individuals (HNWIs) aiming to maximize the current gift and estate tax exemption before its reduction in 2026. This doctrine prevents spouses from creating trusts for each other that allow them to retain lifetime enjoyment of assets while avoiding estate tax inclusion. To mitigate risks, many HNWIs utilize Spousal Lifetime Access Trusts (SLATs), but careful structuring is essential to avoid triggering the doctrine. Proper planning, such as introducing variations in trust terms or utilizing different jurisdictions, ensures the intended tax benefits remain intact.
This is Part 2 of the newsletter on charitable remainder unitrusts (“CRUT”) which is a common planning technique for the charitably inclined high net worth family. As compared to immediate taxation on the gain on the sale of a highly appreciated asset with after tax proceeds being subject to tax annually, the CRUT can allow for superior returns where the distributions to the lifetime beneficiaries will…
A charitable remainder unitrust (“CRUT”) is a common planning technique for the charitably inclined high net worth. The CRUT allows for the tax-free liquidation of a highly appreciated asset, the tax-free growth of the assets inside the CRUT, with the income building inside the CRUT being taxed to the extent of distributions to the lifetime beneficiary. As compared to immediate taxation on the gain on the …
