Other states permit self-settled-like trusts (you can set up a marital trust for your spouse and on his or her demise the assets come flow into a credit shelter trust that you are a beneficiary of).
All told there is a significant number of states that permit self-settled trusts.
Domestic asset protection trusts (“DAPTs”) are trusts that you set up (you’re the settlor) but you are a beneficiary of, called “self-settled” trusts.
Although there have been a number of court cases suggesting that self-settled trusts might not work, the facts on all of those cases have been pretty ugly.
If you borrow million using the highly appreciated stock as collateral, you can gift the M to a grantor trust.
You will grow the value of those assets outside your estate, you’ll pay the income tax on trust income reducing your estate, and your estate will be reduced by interest charges. What if the securities the trust invests in with the fund borrowed plummet in value?
Also, the number of states that permit self-settled trusts has grown over the years and is now 15.But now, most wealthy people’s estates are below the ,430,000 (2015) estate tax exemption amount. Absent the IRS regulatory change the IRS could argue that the FLP/LLC interest must be discounted so that the assets in your estate will not receive the same quantum of basis step up.With a regulation prohibiting discounts your estate might get a bigger basis step up (less capital gains to heirs) at no estate tax cost. ■ Administration: You have to meet regularly with all of your advisers after completing a complex/large transaction in order to properly administer that plan. A few of the myriad of vital steps folks so often get wrong include: missing note payments, missing GRAT or CRT annuity payments, paying fees from the wrong entities/trusts, monitoring defined value mechanisms, not issuing Crummey notices, not monitoring trust termination dates, and more.The Practical Planner is a bi-monthly electronic (or if you prefer, paper) sophisticated planning newsletter that provides practical and creative ideas to address estate, tax, business, personal, financial, and asset protection planning.Articles address current developments, new planning ideas, and topics the media may not have addressed.