Protecting your assets in Florida

I read an interesting article online called “Dynasty trusts let wealthy beat the taxman” that explained why a dynasty trust is becoming more popular and wanted to share it with you.

In the article, author Elizabeth Ody, explains that “A dynasty trust funded with $10 million from a couple today could be worth as much as $184 million in 50 years, assuming no intergenerational transfer taxes and a 6 percent annual return, and before subtracting any federal income or capital-gains taxes paid on the trust’s investment returns. By comparison, assets not placed in a trust and taxed twice as an estate in that period could be worth $39 million at the end of 50 years, assuming a $1 million exemption and 55 percent top rate.”

This is a significant benefit to consider and should not be overlooked when you’re preparing your estate plan.

Many families in Florida have turned to funding dynasty trusts as a way to keep assets within the family. This type of trust has no expiration date, and assets (such as cash and stocks) can be passed on to multiple generations while increasing in value.

A dynasty trust essentially holds assets in trust without transfer of ownership to a beneficiary. Instead, future generations receive distributions from assets within the trust. The trust allows assets to grow safely and for tax purposes, assets remain valued at the amount they were worth when the trust was originally created, and for as long as they stay in the trust. Appreciation on those assets is exempt from estate taxes.

Protection provided by the dynasty or the “generation-skipping” trust is absolute so that future creditors of current or future family members cannot touch it. In Florida, an Irrevocable Life Insurance Trust (ILIT) can be designed as a dynasty trust. The ILIT allows proceeds to reach future generations and is not limited to the generation immediately following the grantor. Plus, each beneficiary will avoid being levied a tax.

Proper estate planning is vital to any family: not solely for millionaires. If you have assets that you want to protect or ensure the inheritance of your life’s accomplishments, then Florida law provides such protection through vehicles like the ILIT at generally less tax impositions compared to other states.

In my book, the Florida Domicile Handbook, you can find more information on these benefits of trusts.

But I’m certain you’ll find the reasoning is undeniable. Florida domicile offers one the most sensible asset protection destinations in the United States today. To find out more about Florida’s tax haven status, purchase a copy of the Florida Domicile Handbook.