Mar 1, 2005 12:00 PM, By Michael N. Delgass, partner, and Deborah S. Gordon, counsel, Day, Berry & Howard LLP, New York an

By: By Michael N. Delgass, partner, and Deborah S. Gordon, counsel, Day, Berry & Howard LLP, New York an

Planners have a challenge: They must find sophisticated, highly tax-efficient techniques that weave family values into financial plans — but don't land clients in audit hell.

Enter the health and education exclusion trust (HEET). This type of trust can provide nearly perpetual deferral of generation skipping transfer (GST) taxes without allocation of the GST tax exemption. It incorporates philanthropic goals into an estate plan, enforces a focus on the purpose for which a trust distribution is being made, and favors distributions that enhance the education and health of a client's descendants. In addition, it provides significant creditor protection for the trust's beneficiaries; this is as close to an iron clad protection as one can get. The HEET also can act as a ready-made prenuptial agreement for every descendant into perpetuity. Yet this trust is not particularly aggressive or risky.

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