USA Law and Practice Contributed by: Christopher Boyett, David Scott Sloan, Max Angel and Eric Bracy, Holland & Knight LLP
to pay the income tax, which further reduces their estate without additional gift tax. Grantor Retained Annuity Trusts (GRATs) Grantor retained annuity trusts (GRATs) are also used to pass appreciation to beneficiaries with little or no gift tax. The grantor receives annuity payments for a set term, and any growth beyond the IRS-assumed rate passes to the next generation gift tax-free. Charitable Lead Trusts (CLTs) and Charitable Remainder Trusts (CRTs) Charitable lead trusts (CLTs) and charitable remain - der trusts (CRTs) are split-interest trusts that combine charitable giving with family wealth transfers. These structures can reduce the taxable value of the gift and may provide income tax deductions. Qualified Personal Residence Trusts (QPRTs) Qualified personal residence trusts (QPRTs) allow a personal residence to be transferred at a discount - ed value while the grantor retains the right to live in the home for a set term. After the term, the property passes to beneficiaries, often with significant gift tax savings. Dynasty Trusts For multigenerational planning, dynasty trusts – struc - tured to last for multiple generations – are commonly used in jurisdictions that permit long-term or perpetual trusts. These trusts can leverage valuation discounts, GST tax exemptions, and other techniques to pre - serve wealth and minimise transfer taxes over time. 2.7 Transfer of Assets: Digital Assets Digital assets (including email accounts, social media profiles, and cryptocurrency) are becoming an increas - ingly important component of individuals’ estates. As a result, incorporating these assets into succession planning is essential to ensure proper management and transfer upon death. Access to and control of these assets by fiduciar - ies are governed primarily by the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which has been adopted in most US jurisdictions. Under RUFADAA, a personal representative, trustee or guardian may access digital assets if the account
holder has provided explicit authorisation through estate planning documents or via online tools offered by service providers. To ensure effective succession planning, it is essential to include clear instructions in estate planning instru - ments regarding the management of digital assets. This includes specifying who should have access, the scope of authority (eg, view only v full control), and how credentials such as usernames and passwords should be handled. Without such provisions, fiduciar - ies may face legal or technical barriers to accessing these assets, even if they are otherwise entitled to manage the decedent’s estate. Cryptocurrency presents unique challenges due to its decentralised nature and reliance on private keys. Failure to document access credentials can result in permanent loss of value. As such, practitioners often recommend secure storage solutions and explicit guidance in estate documents to ensure continuity and control. 3. Trusts, Foundations and Similar Entities 3.1 Types of Trusts, Foundations or Similar Entities Trusts and similar planning vehicles are central to tax and estate planning in the United States, offering flex - ibility, privacy and long-term wealth preservation. Revocable Trusts Revocable trusts are widely used to avoid probate, maintain privacy, and provide continuity of asset man - agement. These trusts allow the grantor to retain con - trol during life and direct the disposition of assets at death without court involvement. Irrevocable Trusts Irrevocable trusts – including IDGTs, GRATs, and CLTs and CRTs – are commonly employed to remove appre - ciating assets from the taxable estate, reduce transfer taxes, and achieve philanthropic goals. These struc - tures can be tailored to meet specific family, tax and legacy objectives.
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