Asset Protection through Gifting in Trust

Each of us has an amount that can be passed on to children or grandchildren at death without Estate Tax. But for amounts in excess of this Estate Tax Exemption, the tax rate is quite high. That’s why, without good planning, Uncle Sam could be your biggest heir.

Fortunately, you can transfer $14,000 per year during your lifetime to as many family members as you want without Gift Tax. And these Annual Exclusion Gifts also avoid Estate Tax at your death.

By using Annual Exclusion Gifts on a regular basis, a family can shelter substantial sums from Gift and Estate Tax. However, most people cannot afford to give up such significant amounts of their savings during their lifetime, just to save Gift and Estate Tax. They need the income from their savings, and they may also need the principal, especially later in life when medical expenses increase.

That’s why we’ve created The Family Bank Trust—a way to give away your assets for tax purposes but retain control and access.

How The Family Bank Trust Works

A husband creates The Family Bank Trust for his wife and child(ren), or vice versa. Each year, the husband transfers cash, securities, or other property to the Trust. The annual gift amount can be up to $14,000, multiplied by the number of trust beneficiaries. His wife manages the trust as trustee. She invests the funds and makes decisions regarding distributions. The wife and children (but not the husband who created the trust) are trust beneficiaries and may receive trust distributions for their needs—health, education, maintenance and support. If the husband needs money, a trustee can make a trust distribution to his wife, who can then use the distribution for their joint needs. If the husband has lawsuit or creditor problems, trust assets are protected because he is not a beneficiary. If the wife or child(ren) have lawsuit or creditor problems, the spendthrift provisions of the trust protect their trust assets.

The Family Bank Trust is a way to protect family assets in the trust from Gift and Estate Tax but are still available if you need them. As an added bonus, assets in the trust are protected from lawsuit and creditor issues.

This information on Family Bank Trusts was prepared by Stone Law, LLC and is intended to give general information, not specific legal advice. For more information contact Stone Law at 877-897-6591.

While we make a concerted effort to maintain and update the information on this site Stone Law, LLC makes no representation, warranty, or claim that the information on this site is current or accurate. Additionally, please be aware that state laws may differ, do not rely solely on information provided on this site without consulting a local attorney.