By Steven J. Oshins, Esq., AEP (Distinguished)

Shhhhhhhhhhhhhh…I have a secret!

This isn’t a secret to some estate planners who take advantage of this opportunity all the time.  But if you’re not one of them, then they’re playing checkers while you’re playing chess…as the saying goes.

It’s time to put yourself on the same level as the top estate planners who maximize their clients’ tax and creditor protection opportunities day in and day out.  Otherwise, they will continue to take your clients from you and to get larger and larger net worth clients while you play in the minor leagues.

Top-Tier Trust Jurisdictions

A handful of trust jurisdictions have passed trust laws that enhance their effectiveness for tax and creditor protection purposes.  This is a multi-billion dollar industry with these states fighting each other for a larger piece of the trust pie.

Alaska, Delaware, Nevada and South Dakota have generally been considered the leaders in this industry.  However, those who make a study of the differences among the state laws and case law will generally conclude that Nevada and South Dakota are the top two with states such as Delaware and Tennessee not too far behind.

How can you make use of this opportunity?  Is it difficult?  Is it expensive?

Using a Trust Company as Jurisdictional Trustee

Some clients prefer to use a bank or trust company as sole trustee.  That is a personal choice and is not the scenario addressed by this article.

The very large majority of clients wish to maintain as much control for themselves and their family members, provided that the family members are financially capable.  For those clients, we generally divide the trustee roles and when using a trust company we use it either as the jurisdictional trustee or as the distribution trustee.

While many trust companies price themselves out and simply don’t take clients with this structure, those that do so generally charge a low, but reasonable (for both client and for trust company) annual fee to provide the client’s trust with jurisdiction in order to save taxes and/or protect trust assets from creditors and divorcing spouses.

Provided that the value is understood by the client, the low annual fee and lack of interference by the trust company (an important factor for most clients), this should be a large part of any estate planner’s tool book.

The Typical Trustee Structure

There is more than one way to bifurcate the trustee roles, but our typical structure is to use a family member as Investment Trustee, a close friend as Distribution Trustee and the Trust Company as Jurisdictional Trustee.

The settlor of the trust generally retains the first power to fire and hire trustees, followed by other family members and friends in the settlor’s selected order of preference, often giving the primary beneficiary the second power to fire and hire.

Conclusion

It doesn’t matter how long you’ve been handling estate plans, either directly or in a related field as part of the financial planning or accounting for the client.  If you’re not already taking advantage of opportunities to save taxes and/or protect assets from creditors and divorcing spouses, it’s never too late to start doing so.

This will change your practice for the better and attract higher net worth clients since these opportunities are most applicable to them.

RELATED EDUCATION

If you found this article interesting, you might also be interested in these other educational programs and products by Steve Oshins:

• The Spousal Lifetime Access Trust: A Gifting and Creditor Protection Technique
• Estate Planning Techniques in a Time of Low Interest Rates
• The Installment Sale to an Intentionally Defective Grantor Trust
• The Grantor Retained Annuity Trust: Significant Estate Tax Savings with Nearly Zero Gift Tax Risk
• Steve’s FREE State Rankings Charts

ABOUT THE AUTHOR

Steven J. Oshins, Esq., AEP (Distinguished)  is a member of the Law Offices of Oshins & Associates, LLC in Las Vegas, Nevada. He was inducted into the NAEPC Estate Planning Hall of Fame® in 2011.  He has been named one of the 24 “Elite Estate Planning Attorneys” and the “Top Estate Planning Attorney of 2018” by The Wealth Advisor and one of the Top 100 Attorneys in Worth. He is listed in The Best Lawyers in America® which also named him Las Vegas Trusts and Estates/Tax Law Lawyer of the Year in 2012, 2015, 2016, 2018, 2020 and 2022.  He can be reached at 702-341-6000, ext. 2, at soshins@oshins.com or at his firm’s website, www.oshins.com.