Several decades ago, most of us felt that we had fully completed our estate planning if we wrote a will that dictated who would receive which of our assets upon death. As estate-planning laws evolved to offer more options, and public awareness of estate planning options grew, more people opted to streamline inheritance processes via asset-protecting and probate-avoiding trusts.
More recently, states have competed against each other to win a bigger portion of the national estate planning industry. The result? The growing popularity and legality of trusts that span generations and even, in theory, eternity.
Trusts that last for eternity are called perpetual trusts, and for individuals who wish to protect the financial security of their family for as long as possible, they make a lot of sense. Consider that, with most perpetual trusts:
Though numerous states now offer legal perpetual states, risks remain. For instance, according to Harvard Law School professor, Robert H. Sitkoff, perpetual trusts are unconstitutional and may be ruled illegal in many of the states that now allow them. Also, states that do not allow perpetual trusts may question the legality of protecting assets by moving them to a perpetual trust established in another state that allows them.
Creditors may eventually succeed in “cracking” perpetual trusts and gaining access to assets in debt disputes. Even trusts that last, for example, 365 years (such as Nevada) may eventually be deemed unconstitutional loopholes, since such extreme lengths of time may be deemed excessive (for perspective, go backward 365 years and you’ll find yourself in the year 1650, 126 years before the founding of the United States).
To navigate the complexities of cross-border asset protection, long-term asset protection and the possibility of future challenges to existing trust options, conduct your estate planning with the help of an experienced attorney.