August 06, 2019
This is the first blog in a three-part series that focuses on Delaware law for your trust.
When you’re creating a trust for the benefit of yourself or your family members, choosing the state law that will govern it has many implications and potential benefits for you and your beneficiaries. Delaware has long been the state law of choice for grantors. So, what makes Delaware law so special, and how can it benefit you and your family?
Establishing a trust in a state that permits the trust assets to grow without payment of fiduciary income tax can provide a significant economic advantage to the trust beneficiaries. Delaware is known as a tax-friendly state for trusts for many reasons, including:
However, it’s important to note that beneficiaries who receive trust distributions may still be subject to taxation, and the trust may be taxed in the grantor’s home state depending on its rules. You should consult with your tax advisor to determine the impact to your tax situation.
Delaware trust law offers flexibility to the grantor, beneficiaries and trustees, making it a relatively flexible jurisdiction for trusts for several reasons, including:
Traditional trust law requires a trustee to keep a beneficiary informed; however, under Delaware law the grantor can change that rule and provide for a “quiet” trust which can provide for the following:
Delaware permits a grantor to create a directed trust, which bifurcates the traditional responsibilities of a trustee between two or more fiduciaries. This approach has several benefits, including:
Traditionally, an individual could not create an irrevocable trust for his or her own benefit while also protecting those assets from claims of creditors. However, Delaware allows for such asset protection trusts that can be advantageous to many, including:
There are many reasons why Delaware is attractive as the state law of choice for a trust. For more information about why Delaware may be right for your trust, visit our CIBC Delaware Trust Company resource page.
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Halsey Schreier is a wealth strategist for CIBC Private Wealth Management in New York, with more than nine years of industry experience. In this role, he provides high net worth clients with integrated wealth management services, including comprehensive estate and financial planning solutions, multi-generational legacy planning and fiduciary administration for trusts and probate estates.
Art Graper, CFP®
January 15, 2016
Judy Saxe, AEP®, CAP®
February 12, 2019
Beth McRae Mayfield
May 30, 2019
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