Saturday, March 15, 2014
Hemenway & Barnes LLP recently published an article entitled, The State of Your Trust: Where Should A Trust Be Sited? Provided below is the introduction of this article:
All of us know the mantra...in buying a home, it’s location, location, location. Deciding where to site a business or build a new facility? You’d be examining elements like local laws, available labor, and tax climate. Where to retire? Similar line of thinking.Yet when approaching estate planning and, more specifically, setting up a long-term, irrevocable trust, many high net worth families both think and act locally. They provide -- often with minimal analysis or advice – for a trust that is governed by the laws of their home state and subject to taxation there, without considering alternatives that may be far more attractive.As some states have modernized their trust laws and expanded the options available to a trust donor, knowing those options and making an informed choice about where to site a trust is more important than ever. So is building flexibility into your plan, such as empowering trustees to change the legal situs of a trust if the circumstances warrant it, all without undercutting your estate planning objectives: no small feat.So, what are the key issues? What planning goals or differences in state law might lead you to establish atrust in State Y over State X?