USA – TEXAS Law and Practice Contributed by: Perrin Clark and Meredith McIver, Ytterberg Deery Knull LLP
the use of annual exclusion amounts when making gifts in trust. • Section 2503 (c) trust – named after IRC Section 2503 (c) which specifically authorises this type of trust, this allows the use of annual exclusion amounts when making gifts in trust for benefi - ciaries under the age of 21 without the need for withdrawal rights and the associated notices to beneficiaries. • Family limited partnership (FLP) – an FLP or a family LLC is used to consolidate and hold assets, often in conjunction with other estate planning techniques, and can offer the potential for mean - ingful valuation discounts with respect to non-con - trolling interests. • Intentionally defective grantor trust (IDGT) – a trust with respect to which a grantor intentionally retains one or more powers in order for the trust to be treated as a grantor trust for income tax purposes without undermining its effectiveness for transfer tax purposes. • Sale for promissory notes – a sale of property in return for promissory notes, often utilising the applicable federal rate (AFR) in order to have the lowest interest rate possible without causing a gift. • Spousal lifetime access trust (SLAT) – a trust cre - ated by a grantor for the benefit of their spouse and descendants, for the purpose of making gifts for the benefit of descendants and utilising availa - ble US federal gift and estate tax exemption, while maintaining their spouse’s access to assets. • Insurance trust – a trust created to hold insurance policies, typically on the grantor’s life, which often includes special tax and insurance power provi - sions. • Grantor retained annuity trust (GRAT) – a type of split-interest trust with respect to which the grantor retains a right to receive an annuity for a period of years, while the remainder interest is left to other beneficiaries, thereby reducing the value of any gift made by the grantor to the trust. • Grantor retained unitrust (GRUT) – a type of split-interest trust with respect to which the gran - tor retains a right to receive payments based on a fixed percentage of trust value for a period of years, while the remainder interest is left to other beneficiaries, thereby reducing the value of any gift made by the grantor to the trust.
• Qualified personal residence trust (QPRT) – a type of statutorily authorised split-interest trust with respect to which the grantor donates their resi - dence and retains the right to use the residence for a period of years, while the remainder interest is left to other beneficiaries, thereby reducing the value of any gift made by the grantor to the trust. • Charitable lead trust (CLT) – a type of split-interest trust in which a charity is given a right to receive an annuity or payment based on a fixed percentage of trust value for a period of years, while the remain - der interest is left to non-charitable beneficiaries, thereby reducing the value of any gift made by the grantor to the trust. • Charitable remainder trust (CRT) – a type of split- interest trust in which one or more non-charitable beneficiaries are given a right to receive an annuity or payment based on a fixed percentage of trust value for a period of years, while the remainder interest is left to charity, thereby reducing the value of any gift made by the grantor to the trust. More than one of these techniques can be combined within a single estate planning strategy, potentially amplifying the overall efficacy of the strategy. Which techniques and what strategy are most appropriate is client specific and dependent on individual facts and circumstances. 2.7 Transfer of Assets: Digital Assets Texas has adopted the Texas Revised Uniform Fidu - ciary Access to Digital Assets Act (TRUFADAA) – see Texas Estates Code Chapter 2001. The TRUFADAA provides a fiduciary with the right to access the dece - dent’s digital assets, subject to the service provider’s terms-of-service agreement; provided, any direction in a decedent’s will, trust, power of attorney, or other record prevails over contrary provisions in such terms- of-service agreement; and provided, further, that any direction left by a decedent in a service provider’s online tool specifically with respect to such directions, prevails over all of the above.
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