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Advanced Planning


In certain circumstances, advanced estate planning techniques are employed to maximize the your estate and the benefit that your heirs may realize. These techniques are used to preserve estate shares from wasteful spending, preserve financial assistance that your heirs may receive, mitigate tax consequences, and even provide for your pets after your demise. Below are the most widely used advance estate planning techniques and a brief explanation.


Spendthrift Trust

Spendthrift trusts are provisions within another trust (such as a revocable living trust) that limit distributions to beneficiaries over a fixed period of time or until a qualifying event occurs (for example, graduating from college; being substance-abuse free for a set period of time; or successfully passing a drug test). The settlor is able to define the qualifying events and/or distribution amounts while he or she is still living, and the successor trustee of the trust is legally bound to carry out those provisions.


Supplemental Income Trust/Special Needs Trust

A supplemental income trust (Amenities Trust) is implemented when a trust beneficiary is receiving (or likely will be eligible in the future to receive) need based government benefits such as Medicaid or SSI and a direct inheritance would disqualify them from receiving future benefits. This type of trust is structured to allow for the maximum benefit from assistance plans while still allowing a beneficiary to receive distributions for amenities from the trust.

Five popular methods for funding a Supplemental Income Trust are:

  • Money from an IRA or qualified plan that can be directed to the Supplemental Income Trust.

  • Other assets can be directed to the  Trust.

  • The Trust can be funded through gifts during your lifetime.

  • Life Insurance can be purchased and the Trust can become the named beneficiary.

  • Grandparents and other family members can leave money to the Supplemental Income Trust using their Wills, Trusts or lifetime gifts.


Education/Support Trusts

An education or support trust can be used to allow the settlor(s) to distribute assets specifically for the education or support of one or more beneficiaries. The settlor(s) determines exactly what is or is not covered under the trust.


Retirement Asset or Stretch IRA Trusts

A trust that is funded with qualified retirement assets such as traditional IRA’s or employer provided plans (Ex/ 401K, 403(b) 457). The main purpose of this trust is to force a beneficiary to take required minimum distributions over their life expectancy from the retirement assets held by the trust rather than allowing them to pull the entire value out of the plan in a lump sum. Obviously, this plan will result in tax deferred growth over the life of the beneficiary and will significantly reduce income taxes.



Qualified Terminable Interest Property Trusts and Qualifies Domestic Trusts are typically drafted in blended family situations and situations where one spouse is not a citizen of the United States, respectively. QTIP’s decrease the ability of the surviving spouse to disinherit the children of the first spouse to die. QDOT’s postpone the payment of the Federal Estate Tax (for families over the Federal Estate Tax Exemption limit) until the death of the surviving spouse.


SBO Trusts

SBO trusts, or “solely for the benefit of” trusts, are irrevocable trusts that hold assets for the benefit of a spouse or another designated individual. This trust is used as part of an advanced Medicaid plan and can make assets, which would otherwise be countable for Medicaid purposes, unavailable to be counted against your total maximum Medicaid benefit.


Irrevocable Life Insurance Trusts

Irrevocable Life Insurance Trusts and Single Owned Survivorship Trusts are advanced tax planning Trusts that provide liquidity to an estate while removing the death benefit of the life insurance from the Settlors/Grantor’s gross estate.


Honarary Trusts

A honorary trust allows for the care of cemetery plots or pets after a settlor’s death. The most common use of an honorary trust is through a pet trust, which has provisions that allow you to provide for a non-human loved one, such as a horse, dog, or cat, after your death. An honorary trust allows you to appoint a caretaker for your pet, establish a standard of care during your pet’s lifetime, and allocate a set amount of money to be used for the care and comfort of your pet. Any money left over (after the demise of your pet) is given to the caretaker you have appointed for their time and efforts on your behalf.

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