S – “S” stands for SPENDTHRIFT TRUST PROVISION. A SPENDTHRIFT TRUST PROVISION allows the creator of a trust (“Settlor”) to create a trust (SPENDTHRIFT TRUST) for a beneficiary so that the assets in that SPENDTHRIFT TRUST are secure against creditors of the beneficiary. This is often times utilized by parents who are concerned that money left to their children will be spent without restraint once the child gains control of the asset. A SPENDTHRIFT TRUST gives the trustee in charge of the children’s (or other beneficiary’s assets) the sole discretion of when, if at all, to release any of the SPENDTHRIFT TRUST’s assets. In Nevada, there is specific statutory provisions governing this kind of trust, which will likely be used as a guide when your estate plan is drafted.
T – “T” stands for TRUST. A TRUST is generally (and ideally) a written set of instructions to a named individual or entity, such as a bank, or a law firm (“Trustee”) with regard to the assets held by the TRUST. The person drafting the set of instructions, and who FUNDS the TRUST is called either a “Settlor” or a “Grantor”; these terms are used interchangeably. A TRUST gains control of assets as a result of the grantor/settlor, transferring their property into the name of the trust. If the Grantor/Settlor fails to FUND their TRUST it will be ineffective to accomplish the intent of the Grantor/Settlor. It is, therefore, vital that once a TRUST is drafted that assets be transferred into it.
U – “U” stands for UNIFIED TAX CREDIT. This is the amount total monetary value (currently $11,200,000) that each U.S. citizen subject to the tax laws of the United States can either gift or bequeath during their lifetime tax free. At one time lifetime gifts were tracked separately from transfers at death, but were later consolidated (“unified”), which in at least that respect simplified tax planning and tax return preparation.
To Be Continued................