The Hidden Strategies: Unveiling the Secrets of Trust Planning

Gabriel Katzner - August 2, 2023 - Trust Administration
estate planning lawyer

Planning how you will pass your estate to your loved ones can be anxiety provoking. You may have a Last Will and Testament and know you want to establish a trust but feel overwhelmed by the options. A constantly changing global economy, shifting tax codes, and changes in your family structure, needs, and goals can make determining the best estate planning tool challenging.

Each of these nine estate planning tools has its own set of advantages. Whether you want more flexibility or increased control over your assets, you’ll find an estate planning tool that suits your needs.

Charitable Remainder Trust

A charitable remainder trust is an irrevocable trust that enables a grantor to transfer appreciated assets into a trust while retaining an income stream for a designated period. After this period, which could be the grantor’s lifespan, the remaining assets in the trust are distributed to one or more designated charitable organizations.

There are two main types of charitable remainder trusts: charitable remainder annuity trusts (CRAT) and charitable remainder unitrust (CRUT). These trusts are designed to reduce taxable income and support a charitable interest.

Dynasty Trust

A dynasty trust (also known as a perpetual trust) is an irrevocable trust that can span more than two generations. In fact, it can theoretically last forever or as long as the trust money and property remain.

Families that want to keep assets or a family business in the family may choose a dynasty trust. For example, a grantor could put shares of a family business in the trust where they would be safeguarded for future generations.

By transferring assets into a dynasty trust, a grantor removes those assets from their taxable estate. As an irrevocable trust, a dynasty trust provides asset protection from potential creditors.

Family LLC

A family limited liability company or LLC is a type of business entity that provides tax benefits and asset protection for its owners. An LLC protects LLC owners from direct liability and allows them to transfer family-owned businesses and wealth across multiple generations. Family LLCs provide flexible ways to manage and distribute assets.

A family LLC owner can choose that the LLC be taxed as a pass-through entity, meaning that income passes to the partners who pay any taxes owed or as a corporation.

Buy/Sell Agreement

A buy/sell agreement is a legally binding contract that is used when a business has multiple owners. It is used to govern the transfer of business ownership interests in certain situations. It allows for a smooth ownership transfer when a triggering event occurs. Business owners can use a buy/sell agreement to ensure that their ownership shares in a business will pass to their intended recipient upon the owner’s death, disability, retirement, or departure.

Generation-Skipping Trust

Generation-skipping trusts allow you to distribute assets to your grandchildren or other beneficiaries who are at least 37 ½ years younger than the trust creator without paying the estate taxes that would be applied if the estate were passed directly to an individual’s children.

Generation-skipping trusts are liable for taxation if the amount transferred exceeds the annually adjusted estate tax ($12.92 million for individuals in 2023). Distributions exceeding this threshold are subject to a 40% generation-skipping trust tax and any other state inheritance or estate taxes that may apply.

Your children can still benefit from the generation-skipping trust because the grantor can give their children access to any income the trust’s assets generate while keeping the assets in trust for the grandchildren.

Grantor Retained Annuity Trust

A grantor-retained annuity trust, or “GRAT,” is an irrevocable trust in which the grantor transfers assets into a trust and then retains the right to receive fixed annuity payments from the trust for a specified period. This fixed or variable annuity is based on the value of the trust assets and a rate set by the Internal Revenue Service.

At the end of the specified term, the remaining assets in the trust pass to the designated beneficiaries without being subject to any estate or gift taxes.

Irrevocable Life Insurance Trust

An irrevocable life insurance trust or ILIT enables a grantor to purchase life insurance, transfer the ownership of the life insurance policies to the ILIT trust, and thus remove the life insurance proceeds from the grantor’s taxable estate.

Upon the grantor’s death, the death benefits from the life insurance policy will be paid to the specified trust beneficiaries.

The grantor can make gifts to the trust up to the annual gift tax exclusion amount without paying gift tax to pay for the premiums on the life insurance.

Qualified Personal Residence Trust

A qualified personal residence trust is an irrevocable trust that allows a person to transfer ownership of their personal residence into a trust (and therefore out of their estate) while still living in the residence for a predetermined period.

A qualified personal residence trust aims to reduce estate taxes while still giving the grantor use of their residence during the trust term. At the end of the trust term, the residence is transferred to the beneficiaries without incurring estate taxes. Relevant gift taxes do apply, and the value of the gift is based on the property’s fair market value and the duration of the trust term.

Spousal Lifetime Access Trust

A spousal lifetime access trust (SLAT) is an irrevocable trust and estate planning strategy that allows one spouse to financially provide for the other using a trust. A spouse can transfer assets into the trust using their federal lifetime gift and estate tax exclusions. This decreases their tax liability and allows them to retain some control over their assets through their spouse.

Upon the spouse’s death, the remaining trust assets can be passed to the other trust beneficiaries free of estate tax.

As you can see, many types of estate planning tools are available. These are just a few of the trust planning options we can use to help you craft an estate plan.

To determine which of these estate planning strategies can best meet your needs, schedule a call with us at 855.631.3457 to learn more about how to protect those most important to you.

Gabriel Katzner

In 2002, Gabriel Katzner, the founding partner of Katzner Law Group received his Juris Doctorate with honors from the Fordham University School of Law. After spending the first 7 years of his legal career
practicing at Cahill Gordon & Reindel LLP, an international law firm based in New York, he went on to found his own firm.

Gabriel Katzner has a track record, along with a vast number of
outstanding public reviews across platforms, of working hard on behalf of individuals who need assistance with comprehensive
estate planning services. Finding a lawyer who is knowledgeable about revocable and irrevocable trust planning, guardianship for minor children, asset protection, trust administration and probate,
as well as Medi-Cal / Medicaid planning is extremely important.

Years of experience: More than 17 years
Location: San Diego, CA



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This page has been written, edited, and reviewed by a team of legal writers following our comprehensive editorial guidelines. Furthermore, it has received approval from attorney Gabriel Katzner, an experienced estate planning lawyer with over 17 years of legal expertise.

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