Ever-changing state and federal taxes, lawsuits by ambulance-chasing attorneys, threats from disgruntled employees or estranged family members, and a million other threats exist to your family’s wealth. When your concerns go beyond avoiding probate and you want to protect your assets to make sure your wealth is used to make a difference in this world, you are ready for a family advisor. Each client who has done advanced estate planning with us has worried about these same things.
But, in talking with us about how they want to use their wealth to make a difference (in the lives of their family, their community, or their church), the plan they create gives them confidence that they’ve done all they can to leave lasting, positive memories of their legacy.
There Are Too Many Strategies To List, But Some That Are Used Are:
Dynasty Trusts
A dynasty trust is a long-term, irrevocable trust designed to pass wealth down through multiple generations without triggering estate, gift, or generation-skipping transfer (GST) taxes at each level. It keeps assets protected from lawsuits, divorces, and creditors while allowing future heirs to benefit from the trust without legally owning the assets.
Generation Skipping Trusts
We often use this type of trust for estates over $5 million. A GST (Generation-Skipping Transfer) trust is designed to pass assets directly to grandchildren (or other “skip” persons), bypassing the children’s estate to avoid double taxation. It leverages the Generation-Skipping Transfer tax exemption to transfer wealth tax-efficiently across multiple generations.
Qualified Personal Residence Trusts
A Qualified Personal Residence Trust (QPRT) allows you to transfer your home to a trust while retaining the right to live in it for a set number of years. During that term, you continue to use the home as your primary or secondary residence, but the home is considered a gift to your beneficiaries at a discounted value for gift tax purposes. If you outlive the trust term, the home passes to your heirs outside of your estate, reducing estate taxes. If you don’t outlive the term, the home is pulled back into your estate, and no tax benefit is realized.
Family Limited Partnerships
A Family Limited Partnership (FLP) is a legal entity that allows a family to pool and manage assets under centralized control, typically with parents as General Partners and children or trusts as Limited Partners. The General Partners retain management control while gifting limited partnership interests to heirs or trusts, often at discounted values due to lack of control and marketability. By gifting FLP shares to a dynasty trust, families can transfer significant wealth across generations while minimizing estate and gift taxes and protecting the assets from creditors and divorce.
Charitable Remainder Trusts
A Charitable Remainder Trust (CRT) lets you donate appreciated assets like stock or real estate, avoid immediate capital gains tax, and receive income from the trust for life or a set term. For example, a couple donates $1 million of stock with a low cost basis to a CRT, gets a charitable deduction, and receives annual payments from the trust. When they pass away, whatever is left goes to the charity they named, leaving a legacy while reducing taxes during their lifetime.
Irrevocable Life Insurance Trust
An Irrevocable Life Insurance Trust (ILIT) is a trust that owns a life insurance policy outside of your taxable estate, keeping the death benefit free from estate taxes. You gift money to the trust annually, which the trustee uses to pay the insurance premiums. When you pass, the full policy proceeds go to your beneficiaries tax-free and protected from creditors or lawsuits.
Intentionally Defective Grantor Trust
An Intentionally Defective Grantor Trust (IDGT) is smart to use because it allows you to remove appreciating assets from your estate for estate tax purposes while still paying the income taxes yourself—further reducing your taxable estate without additional gifting. You sell or gift assets (like real estate or a business) to the trust, and the future growth passes to your heirs without additional estate or gift tax. It’s a powerful way to “freeze” your estate’s value while shifting future wealth tax-efficiently to the next generation.
These are just a few of the tools available to those who are concerned about using their wealth to make a difference in this world.
We Can Help, No Matter How Simple Or Complicated The Situation
Advanced estate planning in Chandler AZ results in unique plans that should be reviewed often. At Keystone Law Firm, we give all our clients the individual attention they deserve.
Located in Chandler, Arizona, we handle probate matters across the state including Gilbert, Sun Lakes, Tempe, Phoenix, Mesa, Scottsdale, and Apache Junction.