If you have a family trust—or are considering creating a family trust—to protect your assets you may want to ask your attorney about creating an out of state trust. It’s a grantor’s market (so to speak) and creating a trust these days doesn’t mean you have to simply accept the tax laws of your state of residence. Creating a trust in another state—with tax laws that are friendlier to trusts—is a perfectly legal option, although you may be required to choose an in-state trustee.
As we mention frequently on our blog, there are many reasons for families to create a trust: credit protection, keeping assets in the family, estate planning, educational savings, and many more. Furthermore, trusts are no longer an exclusive tool for the rich and famous; trusts are useful for just about everybody, and the states recognize this.
States such as Alaska, Delaware, Nevada, New Hampshire, South Dakota and Wyoming have modified their trust laws in recent years to make them more attractive to individuals and families, including nonresidents, looking to minimize taxes, shield assets from creditors and preserve family assets in the event of a divorce, among other things.
If you would like to explore your options for out-of-state trusts our firm can help. We can advise you about your options for more tax-friendly states, help you create a trust in the state of your choice, and even suggest and arrange for in-state corporate trustees if necessary.
More and more our world is one where state (or even in some cases national) boundaries are becoming thinner and thinner, and there is nothing wrong with taking advantage of the benefits this provides. However, it is more important than ever to ensure that you have the correct information, the correct protections in place, and are conforming to ALL the laws before you sign on the dotted line.