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Tampa Estate Planning Attorneys > Blog > Estate Planning > Is A Lifetime Bypass Trust Right For Your Family?

Is A Lifetime Bypass Trust Right For Your Family?


Margie worked hard all her life to put something aside for her grandchildren. She inherited nothing and did not want her kids and grandkids to struggle. Now she is the proud owner of multiple residential properties and a venture capitalist. She has substantial net worth she wants to pass on to her loved ones, but is not sure if a last will and testament is the best mechanism to achieve her goals. Is a lifetime bypass or family bank trust the right option for her needs?

Creating a Lifetime Bypass Trust

A lifetime bypass trust is a mechanism for holding wealth for future generations to benefit from. No distributions can be made during the settlor’s ( person who makes the trust) lifetime. Lifetime bypass trusts cannot be altered once drafted. These trusts are irrevocable, meaning whatever assets are placed in the trust cannot be withdrawn by the settlor, who is the person who creates the trust. However, the settlor does have the option to make one lump sum deposit to the trust or periodic deposits up to one million dollars. All funds and assets housed in the bypass trust are exempt from estate taxes, making this option extremely attractive for families with high net worth.  In addition, if the settlor wishes to make a large gift without taxation, this is a great option. Finally, whatever funds or assets are housed in the trust cannot be touched in a divorce settlement and are protected from creditors in the event of a bankruptcy.

To establish the trust, the settlor must transfer designated assets to the trust and nominate a surviving spouse or fiduciary as trustee. A trustee is responsible for administering the trust. To effectuate the trust, the settlor must nominate a beneficiary, which could be a child, grandchild, extended relative or a charity. It is possible to allow beneficiaries to draw interest distributions on the account while the settlor is still living, or the beneficiary might receive a lump-sum distribution based on the instructions of the trust. Lifetime bypass trusts are an excellent tool for families seeking to preserve wealth over generations. Because it avoids taxes, creditor claims, probate and will contests, it is an excellent estate and legacy planning option to consider.

 Call Tampa Legacy Planning Attorneys at Strategic Counsel Law Group

Our Tampa estate planning attorneys at Strategic Counsel Law Group work to serve the needs of all clients. We recognize that estate and legacy planning is a lifelong process, one that requires adequate discussion and consideration of long-term needs. That is why we spend sufficient time with new clients discussing their goals and what they hope to accomplish for peace of mind and the needs of loved ones and beneficiaries. We can help families identify strategies that can help them preserve wealth over generations while avoiding the hassle and stress of probate. We also provide additional elder planning services such as long-term care planning and Medicaid waiver planning. If you have questions about estate planning or which trust might be right for your family, call our Tampa-based attorneys at Strategic Counsel Law Group today.

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