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Mar 1, 2010 12:00 PM
The Fully Discretionary Ascertainable Standard
It's a hybrid standard that establishes both tax and creditor protections — a terrific strategy in the right circumstances and jurisdictions
A graying widower hires you to reduce his looming estate tax burden and to shelter the wealth he passes on against potential creditors of his descendants. He has three children and seven grandchildren keeping him happy and busy, and he wants to ensure their security after he's gone. Your client agrees to settle a multigenerational trust to house annual exclusion gifts and to purchase life insurance on his life. He is amenable to other advanced planning techniques as well, to ensure that the bulk of his wealth passes to his multigenerational trust in a tax-efficient manner. But as you begin drafting the trust, you come to a major impasse.
Asset protection attorneys are careful to draft trusts in a manner that avoids giving a beneficiary any rights to receive trust property, because, if a beneficiary has a right to receive trust property, so too will his creditors. Asset protection attorneys avoid conferring such rights by providing trustees with full discretion to distribute trust assets to, or for the benefit of, any beneficiary to the exclusion of others, for any or no reason. This distribution scheme, sometimes called a “fully discretionary standard,” establishes maximum creditor protection because the trustee, and not the beneficiary, controls whether and why distributions are made.
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Topics of Interest
| Estate Tax | Donor Advised Funds |
| GSTs | Family Offices |
| Private Foundations | Life Insurance |
| 2010 Tax Act News | Industry Trends Surveys |
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Topics of Interest
| Estate Tax | Donor Advised Funds |
| GSTs | Family Offices |
| Private Foundations | Life Insurance |
| 2010 Tax Act News | Industry Trends Surveys |
E-Newsletter Signup
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