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Proactive Wealth & Estate Planning Strategies You Should Consider Before 2021 Arrives


With each change in administration often comes changes to the estate tax and estate-tax exemptions, leaving many rushing to estate planning attorneys in an effort to properly protect their assets before the new laws can be implemented. Given the current ability to gift significant funds to your beneficiaries and others free of transfer tax and the reduction in estate-tax liability that this provides, families with high net worth assets need to come up with a strategy to protect their wealth, depending upon whether they want to maintain access to assets they plan to remove from their estate, or transfer them to their beneficiaries. And because these changes could be coming to the tax code soon, it would be wise to ensure that your plans are in order now so that you don’t have to make last-minute changes to your estate-planning documents.

While we previously discussed the benefits of one of these strategies—Grantor Retained Annuity Trusts (GRAT)—there are a number of other options available as well, which we discuss below:

Spousal Lifetime Access Trusts (SLATs)

Spousal Lifetime Access Trusts (SLATs) are irrevocable trusts set up for the benefit of the grantor’s spouse, where assets are moved out of the grantor’s name and into a trust, while still sheltering the property from the taxable estate and future creditors. This could be beneficial to a business owner who has a spouse and children, for example, and who wants access to the trust funds throughout his or her lifetime, where those assets will avoid being subjected to estate taxes upon death, and remaining property will become immediately available to their descendants.

The Beneficiary Defective Inheritor’s Trusts (BDITs)

The Beneficiary Defective Inheritor’s Trust (BDIT) is another strategy that allows grantors to benefit from assets removed from the taxable estate. BDITs are also irrevocable trusts, but they allow the beneficiary to use the assets as well. This might be set up by a business owner who, for example, eventually wants to pass their assets onto children or grandchildren, but wants to maintain control of them for now. The owner can withdraw funds and receive distributions from the trust, while these assets are still protected from creditors.

Family Limited Partnerships (FLPs)

Setting up a Family Limited Partnership (FLP) allows families to pass on their assets onto their beneficiaries in the form of gifting limited partnership interests. They continue to control the cash flow, while the beneficiaries are able to collect interest, dividends, and profits.

Charitable Lead Trusts (CLTs)

Those who want to set up a Charitable Lead Trust (CLT) do so by setting up an annuity to a charity for a specific amount of time, and at the end of this time period, the balance of the trust becomes available to their beneficiary (for example, their child). Thus, for example, an annuity would be set up to be payable to the charity for a set number of years, and any remaining assets would then go to the remainder beneficiary.

Charitable Remainder Trusts (CRTs)

With a Charitable Remainder Trust (CRT), the grantor continues to receive income from the trust for a set number of years, and the charitable organization receives the remainder at the end of the term (instead of the remainder beneficiary).

Contact Our Experienced Florida Estate Planning Attorneys If You Need Help Protecting Your Wealth

Any and all estate planning strategies should be carefully examined with an experienced estate planning attorney in order to ensure that your family’s goals are realized. If you live in Florida, contact our Sarasota wills & probate attorneys at Suncoast Civil Law today and we can help craft a plan that meets your needs.