HISTORY OF LEGACY TRUSTS
Generation-skipping dynasty trusts are nothing new. The Kennedys, DuPonts and Rockefellers all used irrevocable trusts to preserve wealth for children, grandchildren and great-grandchildren.
Many of these same strategies, used by America's most successful families, have been modernized for use in what is often called The Legacy Trust.
What Is The Legacy Trust?
The Legacy Trust, sometimes known as a "Wealth Trust," is a third-party irrevocable trust that helps you create a second, protected estate.
This strategy effectively "removes" assets from your estate, outside of the reach of creditors and the IRS.
Funded through annual gifts, The Legacy Trust often serves as a family "savings" plan. The trustee you name to control your Legacy Trust can pay for your family's college education, or provide income to children and grandchildren.
The Legacy Trust also acts as a special source of funds for use in emergencies. Plus, in the event of an unforeseeable hardship, these savings may even be made available to meet your own emergency needs.
What Makes It So Valuable?
As far as estate planning strategies are concerned, The Legacy Trust is effective in reducing estate taxes. Without such a trust in place, money transferred from one generation to the next is taxed each time it transfers hands.
With tax rates reaching 46%, that means that $10 million will only be worth a small fraction of that by the time it reaches the third generation!
That's not the case with The Legacy Trust. Through The Legacy Trust, each and every dollar of savings can pass through three generations without a penny lost to estate taxes.
The Legacy Trust takes full advantage of the Estate Tax and Gift Tax Credits, as well as your annual $12,000 gift exclusion, and preserves wealth for generations that may not even be born yet.
How Does It Work?
As your "second" estate, The Legacy Trust affords you some degree of asset protection. Because it is considered separate and outside of your assets, The Legacy Trust acts as a wall, protecting your assets against divorcing spouses of children, creditors, and judgments against you and your family.
What's more, The Legacy Trust can provide for your family long after you've passed away. In fact, The Legacy Trust can remain in force through the lifetime of the youngest beneficiary, plus 21 years. This often means that your Legacy Trust can provide for your family anywhere from 80 to 100 years.
Advantages of The Legacy Trust
When implemented properly, The Legacy Trust:
Creates a new tax-free estate through annual contributions.
Reduces your family's estate tax bill dramatically.
Makes gifts to children, grandchildren, and even great-grandchildren on your behalf.
Provides a large degree of asset protection for your loved ones.
Can supplement or replace tax-vulnerable pension and IRA assets.
Avoids the harsh Generation-Skipping Transfer Tax (GSTT).
Provides steady income, college tuition funds, and emergency money for your children and grandchildren.
Can be established by a husband and wife, or an individual.
Subdivides into separate trusts after the death of the creator(s), with each child becoming their own trust's trustee.
Provides you with real peace of mind, knowing your assets are secure.
The Legacy Trust is a complex strategy, designed specifically for individuals that want to shield their assets as much as possible and provide for future generations, while reducing estate taxes at the same time.
There is no room for "do-it-yourselfers" here; The Legacy Trust is a complex strategy that must be drafted and implemented by a knowledgeable estate planning attorney.
Each family's situation is different. The Legacy Trust is an advanced wealth transfer strategy that is NOT ideal for everyone.
Take a trip down the path of education, and learn more about the benefits of The Legacy Trust. Then, you can make an informed decision as to whether The Legacy Trust can benefit your own family.