Couple of comments,Thanks for the responses.
The backdoor access I had in mind was via something called a Hybrid DAPT. I confess I only have casual understanding of it. Here, the settlor is not a beneficiary on day one (or ever) but could be selectively added/removed by a trustee/protector. In theory, it could avoid the issues of self-settled trusts. We hope we don't have to ever rely on this feature but it sounds like a good option. Last night, I read up on some writings by prominent NV attorneys. Looks like there are definite gray areas when it comes to asset protection and out-of-state situations.
I'm thinking that as long as a NV trust (for example) is no worse than the CA one, and arguably better in some ways, I'll take that. NV has no state income tax and that might come in handy if/when grantor status is turned-off. This situs meta-decision is important one to make as it determines where we look for attorneys.
- There is a wide spectrum of tax strategies in this world of estate/gift/trust planning from conservative tools like GRATs that are blessed by the code, to extremely aggressive "branded" strategies promoted by single firms who think they've found THE unicorn strategy. Personally, I tend to use the gut test of "if it seems too good to be true, it usually is" for these and I'd personally put Hybrid DAPTs in that bucket. I'm sure you are reading content by Oshins, Blattmachr, Shenkman, etc on the subject and I'd take what they are promoting with a grain of salt. Unless they can point to very clear favorable case law and/or PLRs, i'd be skeptical if you're looking for something that is on the more conservative/mainstream side that you can sleep at night knowing you're not going to be the case law proving the validity of these aggressive strategies. Then again, if you're OK with being on the bleeding edge of aggressive tax strategies, there are plenty out there to choose from.
- Escaping CA taxes by turning off grantor trust status on an NV trust with CA benes is a loaded issue. CA passed SB131 last year going after "ING" trusts, and the FTB seems to want to tax any trust with CA assets, nexus, trustees or non-contingent benes. ACTEC article here will do a better job expanding than I can - https://actecfoundation.org/podcasts/ca ... or-trusts/
Statistics: Posted by Spencer — Sat Aug 24, 2024 7:21 am