Thursday, June 22, 2006

Planning a family trust? Pick your state!

With a few soak-the-rich exceptions, most states used to collect inoffensive "death taxes" covered by the state tax credit mentioned in the preceding post. In essence, these state tax payments didn't cost families anything because the IRS otherwise would have added the same amount to the federal estate tax bill.

Now, with no more state tax credit, wealthy families have reason to compare state tax climates as they plan their estates, or as they decide which state to call home. What's more, as an article (subscribers) in today's Wall Street Journal reports, wealthy families are checking out various states to see whether they encourage family trusts.

Good news for banks and trust companies in "favorable" states? The WSJ seems to think so.

A few factoids from the article:

Trust assets. In 2005 banks held about $843 billion in personal-trust assets, almost double the $471 billion or so they held in 1995.

Dynasty trusts. More than 20 states now allow the creation of trusts that last for centuries, or "forever."

Asset Protection. Affluent legal targets don't have to move assets off-shore any more. Nine states allow "asset-protection trusts."

Unitrusts. More than 20 states permit unitrusts, usually with payout rates of 3% to 5%. More than 40 states give trustees some discretion to supplement income with principal.


Jim Gust said...

Um, so how does a national trust marketing firm handle this diparity in treatment from state to state in it's syndicated newsletters and brochures?

JLM said...
This comment has been removed by a blog administrator.
JLM said...

You sound suspiciously like a U.S. auto company:

"You want a wider choice of fuel-efficient vehicles? Get outta here! I just want to keep on selling Hummers!"

P.S. Blogger's software for posts and comments leaves a LOT to be desired!