Perlin Estate Planning

Can My Trust Outlast My Grandchildren in the State of Florida?

Legislation allowing Mississippians to place their assets in a trust for up to 360 years passed the state House and is now pending before Gov. Phil Bryant. A spokesperson for Bryant said the governor would study the legislation when it reaches his desk before deciding whether to sign it into law. Despite questions in the House on the reason it would be necessary to form a trust that would last 360 years (not nearly as long as the Great Sphinx) the legislation passed by an overwhelming 105-12 margin.

According to the Northeast Mississippi Daily Journal, the state’s House Judiciary Chair Mark Barker said many states were passing laws allowing for the establishments of trusts for 360 years or longer. He also commented that this is actually the process already since there are loopholes in the existing state rules against perpetuities.

In general, though, current state law allows a person to set up a trust that would last to a point where a person’s grandchildren were young adults; however, at that point they would, in effect, own the property or assets and could do with them as they wanted. The grandchildren would have the authority to control the property and assets.

Under the state’s bill heading to the Mississippi governor, a trust for real estate could last for 110 years. But a trust for assets, such as money and investments, would be allowed to last 360 years. The reason for making these rules is that trusts usually are more protected from paying taxes on assets and property.

Give me a call (305-443-3104) to discuss the length of trusts and how they are taxed in the State of Florida; I'm an exceptionally experienced Florida Bar Board Certified Estate Planning Attorney. I've got the know-how to best set up a trust so that your needs and intentions are satisfied, and everything is legal and sound.

Did I mention that I am also a Florida Certified Public Accountant (CPA) and a Florida Bar Board Certified Elder Law Attorney? Of course, if you would like more information about General Estate Planning in South Florida, I have a very informative website you are welcome to visit for more information.

Reference: Northeast Mississippi Daily Journal (March 13, 2015) “Bill allowing trusts for 360 years heading to governor”

Should You Be Like the Clintons? (In Your South Florida Estate Planning)

Former President Bill Clinton and Hilary Clinton received criticism recently for their estate plan. The criticism centered around one way that the Clintons are seeking to limit their estate tax burden; in some critics' views that planning contradicts the Clintons’ political views on the estate tax. However, regardless of the politics, what the Clintons did with their estate plan is something that you might consider for yourself. 

Much has been written of late regarding Bill and Hillary Clinton and their wealth or lack thereof. That issue aside, the Clintons used a qualified personal residence trust (a QPRT for short) as part of their estate tax planning. While QPRTs are complicated trusts, the basics of what they do and why they do it are easy to understand. 

Basically, a QPRT is a “time-limited” trust into which the ownership of a residence is transferred. The value of the residence is fixed for gift tax purposes on the date ownership is transferred. When the predetermined time limit of the trust runs out, the trust is terminated and ownership of the residence passes to a beneficiary designated in the trust. In this case, that beneficiary is presumably Chelsea Clinton. For tax purposes, this transfer is then seen as a gift; when the Clintons pass away, the residence will not be part of their estate for estate tax purposes.

However, there are some potential drawbacks to the use of a QPRT. These drawbacks were addressed in a recent Motley Fool article titled “QPRT: This Tax Strategy Could Save Bill and Hilary Clinton (and You) Big Money.”

For example, when the QPRT time limit expires, the Clintons will no longer own the residence. If they continue living in it after that, then they will have to pay fair market rent to the new owner. Additionally, if the Clintons pass away before the trust runs out, the trust will be destroyed and treated as if it never existed for estate tax purposes.

Not everyone needs a QPRT and not everyone has enough assets to worry about estate taxes. However, for those who do have enough assets, a QPRT is one vehicle that can be used to lower the estate tax burden on their heirs.

For more information about QPRTs and Estate Tax Planning, as well as General Estate Planning in South Florida, please visit my website.

Reference: Motley Fool (June 21, 2014) “QPRT: This Tax Strategy Could Save Bill and Hilary Clinton (and You) Big Money”