You’ll lose control over your money during your lifetime if you make
outright gifts to your kids. You understand the dangers. However, funding
an irrevocable trust may not be your answer either, as you will lose control.
A smarter solution may be to title your assets to a limited partnership
with you and/or your spouse as its general partner. You would then annually
transfer a percentage of the limited partnership interest to your children’s
irrevocable trust. This allows you to reduce your taxable estate each
year as you continue to shift your wealth in the form of limited partnership
interests to your children’s trusts. Your assets will remain safe from
your
creditors because your assets are titled to a limited partnership. You
will continue to control the assets because you are the general partner
of the limited partnership. Your children’s interest will be twice
protected from legal and financial problems – once by the limited
partnership and again by their spendthrift trust. When you die, your remaining
partnership interest will have a discounted value for estate tax purposes.
You can also then leave your remaining limited partnership interest, or
any part thereof, to your children’s’ trust. We have hundreds
of ways to combine trusts, FLPs, LLCs, corporations and other entities
to achieve nearly any asset protection and estate planning objective and
our estate planning attorneys are quite expert at this.
