Inheritance Trusts

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Upstream Multigenerational Planning

Multigenerational estate planning is an important decision for all families. Now there is great attention towards protecting the middle-class. Having a trust has never been more important in any time in history then right now.

Inheritance planning can provide peace of mind for many individuals. This type of planning can provide relief from probate, reduce taxation and provide for division of estates upon death and termination of marriages.

Typically, the focus is on the downstream of inheritance in estate planning. Downstream planning is concerned with passing assets in the most advantageous way to the client’s descendants with provisions for creditor protection, support and education, as well as ways to minimize estate and generation skipping taxes.

In some cases, taxation reaches levels of almost 45%. With these types of inheritances, it is important to consider up streaming the inheritance as well as passing on the inheritance. Proper planning can allow you the use and enjoyment of the inheritance without it being included in your own taxable estate, and without it being subject to the claims of your creditors. For those with taxable estates, receiving an inheritance outright will only increase the estate tax burden on your own family at your death.

This requires a collaborative effort from a cohesive family. It may sound impossible, but plenty of families are able to cooperate when it comes to inheritance; and then again, many families cannot agree. In any event, you see the importance of estate planning.

There are various ways to increase a families’ wealth. One is through coordination of the parents’ overall estate plan with their children’s estate plans. A second is by an “inheritance trustee” and a simple codicil to a will to provide that inheritance will pass to the “inheritance trust” instead of outright to a child. The design of the trust that will receive the inheritance can be prepared to give you the functional equivalency of ownership, but with greater creditor protection and significant tax advantages.

Inheritance trusts reduce taxes, avoid probate and, therefore, provide control in the way process of dividing assets. Having a trust is not out of the question or unattainable for the majority of people in this country even though they may fall short of the wealthy who have paved the way.

An inheritance trust is an option if you plan to leave money behind to minor children, or you are providing for your second spouse and, at the same time, ensure that your assets go to your children later.