The Trust Lawyers Blog

Bye Bye Bypass Trust

Posted by Dave DePinto on Fri, Jul 15, 2016
I Estate Planning Downturn

There has been a massive downturn for Estate Planners since 2012, especially for those with clients whose net worth is under $11mm. The life insurance industry has also reported major declines in sales due to the inability of agents to convince clients that potential estate taxes create the need for permanent life policies. These policies were easily sold in the past as a way to pay the tax on death because the estate tax affected most people in some fashion due to a $600,000 tax exemption amount that reigned for almost four decades.  Even after the Federal exemptions elevated to a robust $5mm in 2012, New York’s decoupling maintained the death tax angst by keeping its exemption at $1mm. 

Then in 2014, New York increased its $1mm exemption by skipping it up annually on a fiscal year to match the Federal numbers by 2019.[1] This unexpected legislation really put the nail in the estate planning coffin.  As of 2016, bypass trusts in wills and life insurance trusts, once staples of every marital estate plan, are rarely desirable by average wealth clients.  With access to so much information on the Internet, clients proactively read whatever their search engine feeds them about estate planning.  They tell us about the simplicity of portability, and how basic wills would suit them just fine; and this is all based on the flawed concept that Congress has magically eliminated the need for planning since they are worth less $10.9 mm.

II. Background 

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Tags: Estate Planning, Elder Law, trusts, Bypass Trust, Estates

Dynasty Trusts

Posted by Dave DePinto on Fri, Jul 15, 2016

Dynasty Trusts

In the early 1900's, a handful of industrialists and entrepreneurs had amassed tremendous fortunes. John D. Rockefeller had made his name in oil, Henry Ford in automobiles, Carnegie in steel. Their estates, in today's dollars, would rival those of Bill Gates and Warren Buffett.

As these visionaries aged, most of them asked a handful of lawyers the same question: "What can I do to preserve my estate?" They knew that when they died, their estates would be heavily taxed when passing to children, and would shrink even more when going to grandchildren.

Using some of the most tax-savvy minds in the country, some of the most successful families created a separate trust... a legal entity designed to provide substantial assets to future generations, with little or no estate taxes. What they did, in the process, was create the "Dynasty Trust."


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Tags: Dynasty Trusts, Estate Planning, Elder Law, trusts

Transfer of Home With Life Estate

Posted by Dave DePinto on Thu, Jul 14, 2016



In certain situations transferring a residence with the retention by the owner of a life estate is a common technique. The life estate provides the transferor with a level of comfort in knowing that their legal right to remain in the property for life is reserved in the deed, and that the life estate cannot be extinguished by a future sale, unless consented to. The retention of a life estate has advantages in terms of the transfer penalty period calculation if nursinghome care is required, as explained below. However, once the life estate is in place, the house will not likely be able to be refinanced or mortgaged.


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Tags: Estate Law, Estate Planning, Life Estates, Elder Law, trusts, Estate Tax

The New Estate Planning Game

Posted by Dave DePinto on Mon, Jul 11, 2016

I. 2011/2012 Gifting Before Sunset

A. $5 million exclusion amount for gifts/estate/Generation Skipping Tax (GST)

B. Change of planning strategies

1. Gifts to Grantor Trusts rather than sales

2. Restructure prior sales that used guarantees

3. Increase use of Qualified Personal Residence Trusts (QPRTs)

4. Gift splitting up to $10 million

5. Larger gifts to life insurance trusts to avoid Crummey letters

C. Claw Back on Sunset

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Tags: Estate Law, Estate Planning, Life Estates, Minimize Taxes, Elder Law, trusts

Tax Planning for Trusts and Estates

Posted by Dave DePinto on Wed, Jun 22, 2016


a. Real Property

A qualified personal residence trust ("QPRT") is a technique for gifting residential property at discounted values.  The QPRT is an irrevocable trust, which becomes the legal owner of the home during the trust term.  The grantor would continue to live in the home during the term of the trust, and continue to pay the real estate taxes, mortgage and maintenance expenses; the taxes and interest can be deducted on the grantor's personal income tax return, as it was before.  The grantor must remain personally and contractually bound to the trustee to pay off the mortgage indebtedness in order for the amount of the mortgage to be disregarded for valuation purposes.  At the end of the term, the beneficiaries would legally own the home but the grantor's spouse may have the right to live in the house for his/her lifetime.  At that point, the grantor may also remain living there due to spouse’s life estate.  Should the grantor's spouse predecease, the grantor could remain living in the house as long as fair market rent is paid.  The term of the trust is a period of years, selected by the grantor.  The longer the term, the greater the tax benefits.  However, if the grantor does not outlive the term, any tax benefit of this strategy is lost.


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Tags: Estate Law, Estate Planning, Life Estates, Asset Protection, Minimize Taxes, Elder Law, QTIP, trusts