It appears another state is looking to bag its "Rule Against Perpetuities" law limiting the number of years assets may be held in trust. Legislation is awaiting the signature of Mississippi Governor Phil Bryant. The vote in the House sending the legislation to his desk passed with a 105-12 vote.
So, why would anyone want assets to continue in trust - for 360 years?
According to the Northeast Mississippi Daily Journal, the state’s House Judiciary Chair Mark Barker said many states were passing laws allowing for the establishments of trusts for 360 years or longer. Barker also noted that there are loopholes in the existing state rules against perpetuities.
However, at that juncture the grandchildren, not the trust, then "own" the trust assets and can do with them as they please.
For better or for worse.
Problem: If the grandchildren "own" and "control" the trust assets, then the assets can be reached by their creditors and predators.
Can you say divorces, lawsuits and bankruptcies? Lions, and tigers and bears, oh my!
Under the pending new Mississippi law, a trust for real estate could last for 110 years - and up to 360 years for non-real estate assets. In addition to asset protection, there are some tax advantages to trusts of long-term duration.
Contact an experienced estate planning attorney about the length of trusts and how they are taxed in your state. He or she will have the know-how to help you meet your asset protection and tax planning objectives.
*An observant (and astute) subscriber to this blog may recall the mention of the "Rule Against Perpetuities" in a post just last week. Hint: Post-Victorian Proper England meets Post-Modern Sultry Florida. Click here for the answer.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri) and to download free tools to help you organize your estate, visit my estate planning website.
Reference: Northeast Mississippi Daily Journal (March 13, 2015) “Bill allowing trusts for 360 years heading to governor”