Unlimited Duration Trusts - Minnesota CLE

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IRS PLR- 200944002 “We are specifically not ruling on whether Trustee’s discretion to distribute income and principal of Trust to Grantor combined with other facts (such as, but not limited to, an understanding or preexisting arrangement between Grantor and trustee regarding the exercise of this discretion) may cause inclusion of Trust’s assets in Grantor’s gross estate for federal estate tax purposes under § 2036.” © South Dakota Trust Company, LLC – All Rights Reserved 18
Possible Answers for Both Estate and Asset Protection Issues - Adding the Grantor as a Future Beneficiary of Self-Settled Dynasty Trust?: • Key trust protector power for third party and/or self-settled trusts: – Power to add and remove beneficiaries – Grantor? Grantor’s spouse? – Class of grandparent’s descendents - Example: This class may be defined: “x’s [grantor’s grandparent’s] descendants.” – Caution: Toggling grantor trust status on or off – IRC Section 2035 – Coordinates with 2036(a)(1) so, if trust protector can remove grantor as beneficiary within three years of death • Consider only adding grantor as a beneficiary based upon status of the spouse: – Spouse named as initial beneficiary: • Utilize floating spouse: “My “spouse” means the person, if any, who is married to and not living separate and apart from that person (other than for medical reasons), or who satisfied these requirements at that person’s death and has not remarried.” – Grantor later added as a beneficiary upon spouse’s death or upon divorce • Grantor becomes beneficiary after term of years: • 10 years – Avoids 10 year clawback if grantor goes through bankruptcy • 5 years • Grantor sells assets to self-settled trust for a promissory note. © South Dakota Trust Company, LLC – All Rights Reserved 19
Page 1 and 2: MINNESOTA CLE’S 39 TH ANNUAL PROB
Page 3 and 4: Why Establish a Family Bank Dynasty
Page 5 and 6: Modern No [or] Long Term “Rule Ag
Page 7 and 8: Possible Future Transfer Tax Legisl
Page 9 and 10: The Advantages of the Inter-vivos (
Page 11 and 12: Current Status of Transfer Taxes an
Page 13 and 14: How the Lifetime (Inter-Vivos) Dyna
Page 15 and 16: Two Major Types of Irrevocable Inte
Page 17: Possible Self-Settled Dynasty Trust
Page 21 and 22: Summary: Self Settled Dynasty Trust
Page 23 and 24: Two Types of Dynasty Trust For Inco
Page 25 and 26: Popular No Income Tax Trust States:
Page 27 and 28: Typical Choices for Dynasty Trust T
Page 29 and 30: Types of Trust Administration •
Page 31 and 32: Advantages of a Directed Trust: •
Page 33 and 34: Typical Trust Protector Powers (Var
Page 35 and 36: Special Purpose Entity or Trust Pro
Page 37 and 38: Grantor as Investment Co-Trustee/Fi
Page 39 and 40: Discretionary Trusts: • Both Self
Page 41 and 42: Asset Protection: LLC’s and LP’
Page 43 and 44: Miscellaneous Asset Protection Cons
Page 45 and 46: Leveraging the Dynasty Trust - Prom
Page 47 and 48: Dynasty Trust - Enormous Size Poten
Page 49 and 50: • Larger Gift Tax Exemptions ($5M
Page 51 and 52: Arbitrage Over Note Interest of 1.0
Page 53 and 54: Promissory Note Sale (PNS) - Doctor
Page 55 and 56: Distribution Committee (Fiduciary,
Page 57 and 58: Sample Incentive Family Bank Dynast
Page 59 and 60: Summary: How to Structure a Dynasty
Page 61 and 62: Four Levels of Protection: 1. Self-
Page 63 and 64: Miscellaneous DAPT Considerations:
Page 65 and 66: Typical Estate Plan Maximizing Gift
Page 67 and 68: “Purpose Trust” Statute: • De
Page 69 and 70:
Summary of Popular Methods for Chan
Page 71 and 72:
Change of Trust Situs Followed by R
Page 73 and 74:
1. Modifying powers of appointment;
Page 75 and 76:
Unlimited Duration Rule Against Per
Page 77 and 78:
Domestic Trust Situs Comparison Sum
Page 79 and 80:
Disclaimer: These informational mat
Page 81 and 82:
Al W. King III, J.D., LL.M., AEP (D
Page 83 and 84:
Al W. King III, J.D., LL.M. Co-Chai
Page 85:
“The PPLI Solution (Chapter 6:
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Unlimited Duration Trusts - Minnesota CLE

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