Bear in mind that under section 156 of the Restatement (Second) of Trusts, creditors can reach the transferred interest in self-settled spendthrift trusts, and "creditors can reach the maximum amount which the trustee under the terms of the trust could pay to [the settlor] or apply for [the settlor's] benefit" in self-settled discretionary trusts
, (146) Thus, in a state where it is against public policy for a settlor to shield one's assets in a self-settled trust, the settlor will be subject to inclusion under either section 2036(a) or section 2038(a)(1) of the Code.
A discretionary trust
is one where the trustees have more discretion over how they distribute income and capital, perhaps in meeting school fees for example.
Possibly the portion of the current statute that provides that a creditor of a discretionary trust
may not "attach or otherwise reach" was considered by the committee to be clear enough to protect the intended beneficiaries of discretionary trusts
even from exception creditors.
In the case of a non-domiciled UK resident or an individual investing through a jurisdiction that uses trusts for tax mitigation, a discretionary trust
will be set up in an offshore jurisdiction, with a separate holding company as its primary asset.
He added: "There is no individual owner, that's the nature of discretionary trusts
- it's a perfectly legal and much-used ownership structure in many different industries, not just football.
If this would leave your spouse in financial difficulty, Ms Talbot suggests you both incorporate a nil-rate band discretionary trust
into your will.
It is also important to note the Uniform Trust Code, as passed by the National Conference of Commissioners on Uniform State Laws on August 3, 2000, takes the same position as the Third Restatement regarding discretionary trusts
If there is any danger of inheritance tax you should review your wills and look at the possibility of discretionary trusts
His assets, which included a pounds 1million house in London and a villa in the south of France, were hidden in a web of discretionary trusts
and offshore shelf companies to avoid tax.
A way round this problem involves the use of Discretionary Trusts
and provides a method of using up the individual allowances whilst ensuring that the spouse can receive an income from the money before it eventually passes on to the children.
9) Discretionary trusts
can also present valuation problems; the Service has ruled that a life estate cannot be valued if the trustee has the absolute discretion to either pay out trust income to the income beneficiary or to accumulate it.
Potential benefits from discretionary trusts
should not disqualify the disabled child from benefits based upon an income and asset test.
Congress has passed legislation making inter vivos (lifetime) transfers to discretionary trusts
available to the beneficiaries of such trusts.
The Restatement Second distinguishes discretionary trusts
from spendthrift trusts as follows:
Protective measures include discretionary trusts
, shareholder agreements and pre-nuptial agreements.