The flexible irrevocable trust

Article Abstract:

Flexibility can be built into an irrevocable insurance trust by drafting provisions granting a limited power of appointment to beneficiaries, allowing the trustee to terminate the trust and distribute the policy to beneficiaries or the grantor's spouse, and by granting the trustee broad distribution and loan powers and the ability to modify nondispositive provisions in response to tax law changes. Proper drafting will also allow for changes in the grantor's marital situation. An inflexible trust can be transferred to a new trust, without triggering transfer-for-value or three-year includibility rules, by purchasing the policy from the existing trust and selling it to the new trust.

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The family bank

Article Abstract:

A family bank, or dynasty trust, can be used to avoid the generation-skipping transfer (GST) tax and ensure asset growth for successive generations. An individual transferor's $1 million GST tax exemption can be allocated to gifted assets such as life insurance trust premiums, creating a family bank for sheltering the asset pool from transfer taxes.

Usage, Generation-skipping transfer tax

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