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Tax Deferral

While the flexibility and accessibility available through the Family Income Trust are important provisions, perhaps the single most important aspect of the Family Income Trust is the incredible estate tax savings which it can afford your family.

Property which you transfer to an irrevocable trust, even one that is not a Family Income Trust, will be made via gift, either as part of your $15,000 annual gifts to your beneficiaries or through reduction of your available $11,580,000 Lifetime Exemptions (23,160,000 for a married couple). In addition to gifting assets to the trust, you can also sell assets to the trust tax-free.

By giving property to an irrevocable trust and retaining no control over it, the property should not be deemed part of your assets for estate tax purposes. Thus, whatever you have given to the Family Income Trust or sold to the Family Income Trust and all of the growth thereon, will avoid taxes at the time of your death.

The Family Income Trust takes this concept and goes one step further. In the ordinary irrevocable trust, the property will pass, tax-free, to your children at the time of your death. However, when your children die, any remaining amounts of the property you have left to them, along with any wealth they have been fortunate enough to accumulate during their lifetime, will be taxed at rates up to 40%.

The Family Income Trust is designed to avoid inclusion in your children’s estate. When your children die, none of the property in the Family Income Trust will be taxed. Instead, the Family Income Trust will continue in existence for the benefit of your grandchildren. Estate taxes will be incurred only at the time of death of your grandchildren or great grandchildren. In all likelihood, your grandchildren will not die for 75 years, or more. By not paying estate taxes for all those years, you give your family the opportunity to use the property that would otherwise have gone to the IRS.

As you can see, the Family Income Trust is a powerful estate planning strategy available today. By combining flexibility, accessibility and tax savings in one vehicle, you can truly keep your wealth in your family.

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