1. Estate Tax Reduction
This is generally done through gifting assets such as highly appreciated stock into a trust for the benefit of a spouse and children or for the benefit of charitable organizations, or gifting away interests in closely held business entities such as corporations or LLCs. Once the assets or business interests are gifted away from the owner and into the trust, they can no longer be included in the owner's estate for tax purposes.
2. Legacy Planning
There are different types of trusts that can be established not only to minimize or eliminate estate taxes, but also to create an ongoing legacy for future generations. Many states allow trusts to continue for hundreds of years or even in perpetuity, thereby allowing their residents to establish dynasty trusts for their current and future family members. Others choose to create a legacy in their community by setting up charitable trusts or foundations that will provide a self-perpetuating endowment for years to come.
3. Asset Protection
For those who have accumulated even minimal wealth, the fear of losing it all to a lawsuit can become a great concern. Many advanced trusts, such as Buildup Equity Retirement Trusts and Legacy Trusts, can not only help to minimize estate taxes, but offer the added bonus of protection against judgments and divorce decrees. In fact, self-settled domestic and offshore trusts are specifically designed to keep assets held in these trusts away from creditors. Other advanced techniques, such as gifting through a family limited liability company, add a layer of asset protection for the property owned by the company.
