Integrated Asset Protection – Wealth Building – Tax Saving – Estate Planning

In designing integrated asset-protection and wealth-building structures, many variables are considered. No single approach is applicable to all situations.

Knowledge of domestic and offshore legal entities, U.S. tax laws, creditor and debtor laws and offshore financial products is required to design strategies and plans appropriate for a particular set of circumstances. This office utilizes the services of experts and service providers around the world to implement optimal plans and structures for its clients. The office welcomes a client’s current financial advisers, attorneys and accountants in its analysis and planning.

Business and personal assets are at risk from frivolous law suits. Income, capital gain, gift and estate taxes hinder the accumulation of wealth and then erode what has been achieved. But, advanced planning can protect assets against appropriation by civil courts and tax authorities. For example, selective use of business entities can insulate high-value assets from high-risk activities. State and federal exemptions to court judgments and bankruptcy exist for certain property. Life insurance and annuity products provide tax-saving investment opportunities in addition to financial security. Selective transfer of business and personal assets into appropriate offshore and domestic entities effectively combines asset protection with wealth building and estate planning.

Integrated asset protection structures protect personal and family wealth against both federal and state income and estate taxes.  For example, New York’s estate tax exemption is $6.6 million (in 2023), but if the estate value exceeds 105 percent of the exemption amount (beware the “cliff”!), then the entire estate is taxed at a rate between 3 and 16 percent. Yet, New York and all other states (except Connecticut) have no gift taxes. Thus, “gifting” of assets to a dynasty trust protects them from both federal and state estate (or inheritance) taxes, as well as providing asset protection against possible creditors of trust beneficiaries.

Utilization of available asset protection strategies, however, requires transfer of property into suitable structures before unforeseen legal or financial problems arise. If asset protection measures are not implemented long (e.g., a year or more) before an actual crisis occurs, fraudulent transfer laws could be used by a court to subvert an asset protection plan. The idea of irrevocably transferring assets into a trust structure often causes justifiable concern to an individual who worries about losing all future access to the assets. Learn about some reliable techniques for maintaining Grantor Access to Irrevocable Trusts.

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Short List of Tools and Techniques

Captive insurance companies — offshore and domestic

International and domestic asset protection trusts

International private-placement life insurance (PPLI) and annuities — min. $1 million premium commitment

Domestic life insurance and annuities

U.S. tax law compliance

Limited liability companies (LLCs)

Foreign asset-protection LLCs taxed as US disregarded entities

Family limited partnerships (FLPs)

Offshore private foundations

Tax-free offshore jurisdictions

Bilateral tax treaties

U.S. gift and estate tax planning

Value-discounted transfers

Value “freezing”

Currency diversification

Liability insurance (professional and personal)

Limited partnerships (LPs)

U.S. bankruptcy planning

Charging order protection

Irrevocable life insurance trusts (ILITs)

Dynasty trusts — legacy trusts

Spendthrift trusts

Pre-Nuptial Planning

Medicaid Asset Protection Trusts

Privacy

Expatriation

APT-1 — Avoid-Estate-and-Generation-Skipping-Transfer (GST) Taxes 

APT-2-PLR-200944002-and-Self-Settled-Asset-Protection-Trusts.pdf 

Irrevocable Dynasty Trusts Utilize $12.9 Million Exemptions for Gift, Estate and Generation Skipping Transfer Taxes
Summary: As of January 2023, the lifetime federal gift and estate tax exemption and the generation-skipping transfer tax (GSTT) exemption are both set at historically high values of nearly $13 million. These exemptions provide an opportunity to individual United States taxpayers to move millions of dollars into an irrevocable dynasty trust without incurring punitive gift taxes, and to ensure that future generations of trust beneficiaries receive benefits free of estate and GST taxes.

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Self-Settled Discretionary Asset Protection Trust Not Part of Estate
Summary: An IRS ruling provided some clarity and reassurance to US taxpayers who want to be beneficiaries of a self-settled, irrevocable, discretionary asset-protection trust. In Private Letter Ruling (PLR) 200944002, the IRS ruled that assets in an asset protection trust were not includable in the grantor’s gross estate even though the grantor was a beneficiary of the trust.

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