Structuring Trust-to-Trust Transfers to Address Deficiencies in Existing Irrevocable Trusts

This CLE course will provide estate planning counsel with a practical guide to repairing and refreshing stale irrevocable trusts through trust-to-trust transfers. The panel will discuss the factors that can make an irrevocable trust's terms stale, review the fiduciary concerns involved in trust-to-trust transfers with new trustees, and offer practical drafting tools to avoid transfer tax consequences in structuring a new irrevocable trust and making the trust transfer.

Estate planning attorneys and advisers frequently are confronted with existing irrevocable trusts whose provisions no longer meet the client's needs. Whether through change in family/beneficiary situations, changes in asset composition, defects in the original trust document, or different tax strategy requirements, planners must be able to modify these stale irrevocable trusts to ensure clients have a tax-efficient means of transferring assets to designated beneficiaries.

A critical tool for estate planning counsel is structuring trust-to-trust transfers to address deficiencies in these trusts. Estate planners can structure new or existing irrevocable trusts to serve as recipients of assets from these existing stale trusts, making sure the terms of the new trust meet the updated needs of their clients.

These trust-to-trust transactions are not without tax and fiduciary risks, so estate planners must be fully aware of potential transfer tax consequences, fiduciary impacts upon trustees, and various state law provisions that may complicate the transfers. Structuring the recipient trust to avoid these negative consequences is critical to achieving a tax-efficient asset result.

Listen as our experienced panel provides a practical guide to structuring trust-to-trust transfers as a means of fixing stale irrevocable trusts.