A Legacy Trust is an irrevocable trust often referred to as a “Wealth Trust” which serves to protect assets to benefit multiple generations without the costly effects of transfer taxes. A Legacy Trust may continue as long as one has heirs — providing financial security for grandchildren, great-grandchildren and beyond.
As a “second” estate, The Legacy Trust affords some degree of asset protection. Because it is considered separate and outside of one’s assets, The Legacy Trust acts as a wall, protecting your assets against divorcing spouses of children, creditors, and judgments against the trustor and the trustor’s family.
The Legacy Trust is traditionally funded through annual gifts. The trustee that controls the Legacy Trust has the authority to pay for college education or provide income to children and grandchildren. Additionally, in the event of hardship, these savings may even be made available to meet the trustor’s emergency needs.
Benefits of a Legacy Trust include full advantage of the Estate Tax and Gift Tax Credits, as well as the annual $12,000 gift exclusion.
When implemented properly, The Legacy Trust:
- Creates a new tax-free estate thru annual contributions
- Protects assets
- Avoids the generation skipping transfer tax
- Subdivides into separate trusts with each beneficiary becoming their own trustee
- Offers a steady income
- Reduces the family tax bill
The Legacy Trust can provide for your family long after one has passed away. In actuality, The Legacy Trust can remain in force through the lifetime of the youngest beneficiary, plus 21 years. This often means that the Legacy Trust can provide for a family anywhere from 80 to 100 years.