Marc J. Soss, Esq.


(941) 928-0310 | mjs@fl-estateplanning.com

ADVANCED FLORIDA ESTATE PLANNING TECHNIQUES

IRREVOCABLE TRUSTS:


Qualified Personal Residence Trusts (QPRTs): A technique to give away a principal or secondary residence, or both, subject to your right to occupy the residence for a fixed period. The residence may be given to beneficiaries at a discount to current market value and also transfer future appreciation free of taxes. After expiration of the period, the asset will be outside your estate for federal estate tax purposes.  You may then rent the residence from the QPRT's beneficiaries.


Irrevocable Life Insurance Trusts (ILIT): An irrevocable trust created to be the owner of a life insurance policy. Annual gifts can be made to the ILIT, in order to provide the trustee with the funds necessary to pay the annual insurance premiums.  The ILIT will be structured as a "Crummy Trust" to allow the annual gifts to qualify for the annual exclusion from taxable gifts.  The ILIT protects the insured individual from holding powers over the policy on his or her life and avoiding inclusion of the entire face value of the policy in their estate at death and being subject to federal estate taxes.  The powers which can cause this to occur include the right to name the beneficiary, the right to borrow against the cash value, and the right to cash in the policy. 


Grantor Retained Annuity Trust (GRAT): The basic format of a GRAT can be described as a trust created upon a grantor's transfer of assets to a trust while retaining an annuity payment for a term of years. To avoid a gift upon formation of the GRAT, the retained annuity is designed to equal the value of the assets transferred based upon the term of the trust and an assumed growth rate over the term set forth by the Treasury Department ("7520 rate").  If the total return on trust assets outperforms the 7520 rate hurdle, the excess value passes to the next generation free of estate and gift tax. By its nature, the GRAT is a "grantor trust," which means that the grantor remains responsible for any income taxes generated by the trust assets.


Dynasty Trust: Twenty-eight states plus Washington, D.C., permit irrevocable trusts with in-state trustees to endure for generations, and perhaps forever. If structured properly, such trusts can avoid estate or generation-skipping taxes. 

other options:


Generation-Skipping Transfer Planning (GST): Utilization of an individuals full GST exemption can save families an enormous amount of taxes.  This technique can be utilized through the use of trusts without the skipping of benefits for the next generation. The beneficiaries can serve as their own trustees and be given powers of appointment, can control the investment and the ultimate disposition of the assets. Enhanced savings are available by having the trust continue indefinitely, or for the maximum period permitted by the rule against perpetuities.

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