The Uses of Trusts and Their Tax Consequences

Author: Steven G. Siegel

Estate planners continue to emphasize trusts in their planning practices. They are being used for a wide variety of clients – not only the most wealthy, but also for a much broader part of the population. Why? Issues of financial management, asset protection, maturity concerns, matrimonial problems and tax planning can all be addressed with the use of trusts.

This course addresses why trusts are useful and necessary, and provides a survey of a wide range of trusts that are used in all aspects of planning, including simple, complex and grantor trusts, living trusts, life insurance and retirement trusts, trusts to be used in business succession planning, trusts for S corporation shareholders, trusts to be used in charitable planning, and special needs trusts. When they should be used by planners and clients as well as their income, gift, estate and GST tax consequences will be discussed.

Publication Date: December 2021

Topics Covered

• Basic Characteristics and Elements of Trusts
• Why Are Trusts Useful and Necessary?
• Living Trusts
• Unified Credit Shelter Bypass Trust
• Use the Exemption at the First Death
• Using Trusts to Secure the Benefit of the Marital Deduction
• Trust Planning for Children
• UGMA and UTMA Transfers
• Using Trusts for Gifts to Charity
• The Client Is Not Ill, Wants Estate Reduction, Wants to Transfer Assets but Wants Some Return on the Assets Transferred
• Planning with Intentionally Defective Grantor Trusts
• Planning with Dynasty Trusts

Learning Objectives

• Gain a practical and up-to-date understanding of how and when planners recommend trusts as part of a life plan and part of an estate plan
• Identify the basic trust relationships and how choices of fiduciary and beneficial interests are determined
• Differentiate the many types of trusts available for planning in all types of client situations
• Recognize how to focus on which types of trusts will make sense to recommend to your clients
• Describe each type of trust from the viewpoint of its tax consequences
• Recognize how to address recent developments and favorable changes for trust planning
• Differentiate types of trust and how they apply to client scenarios
• Describe the term that refers to the legal home of a trust
• Identify an advantage of a living trust
• Identify a type of trust whereby the spouse along with other beneficiaries could all be named as permissible beneficiaries
• Identify a requirement for a power of appointment trust
• Describe CRATs and CRUTs
• Identify an estate tax consequence regarding a client's interest in charities
• Recognize a type of CRUT which provides a fixed percentage annual payout of the unitrust amount
• Recognize a limit on the number of residences a person may place into personal residence trusts
• Describe a type of trust where the remainder interest never vests in any beneficiary

Level
Basic

Instructional Method
Self-Study

NASBA Field of Study
Taxes (8 hours)

Program Prerequisites
None

Advance Preparation
None