Do you have the tools to develop the best estate planning solution for your clients? As an estate planning lawyer, you need to be able to navigate the nuances of each case while still delivering accurate estate planning documents in a timely manner. How can you strike this balance? With document drafting software such as Wealth Docx® it’s easy to account for the variety of trusts that clients might require.
Individual And Joint Irrevocable Life Insurance Trusts (ILIT)
To manage tax payments, an ILIT may be a great fit. The trust owns the life insurance policies, removing them from the estate. Irrevocable Life Insurance Trust Forms may be especially worthwhile if the estate consists primarily of real estate or other non-liquid assets. The insurance money can pay any taxes, and you may spare heirs a forced sale.
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Domestic Asset Protection Trust (DAPT)
This may be an option for those worried about credit or tort liability. Currently available in 16 states (including Alaska, Delaware, Nevada and South Dakota), is an irrevocable trust that allows the settlor to benefit from the trust — while also offering protection from creditors. Notably, a DAPT requires funding before the settlor receives any tort claims. But it’s important to discuss the underlying facts of these concerns: states may have statutes of limitations between the creation of the DAPT and when creditor protection kicks in.
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Third Party DAPT
Also known as Hybrid Domestic Asset Protection Trusts, these trusts differ from DAPTs in that the settlor isn’t an initial beneficiary. The trust is set up with spouses and children as beneficiaries with asset protection planning intact. A Third Party DAPT allows the settlor to later become a discretionary beneficiary. On the other hand, should bankruptcy or a lawsuit loom, the trust protector can remove the settlor as a discretionary beneficiary upon request.
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