Attorneys For Delaware Advantage Trusts

Overview

For more than a century, Delaware has been recognized as the “corporate capital” of the world. For generations, however, Delaware has captured the attention of families and their advisors, both nationally and internationally, as a favored home for their wealth transfer planning. Delaware maintains this rich tradition today with its variety of tax-efficient and innovative trust strategies.

With a well-developed body of trust law, evolving improvements to its trust statutes and the expertise of Delaware’s well-known Court of Chancery, the state has established itself as the jurisdiction of choice and the “trust capital.” Morris James’ trust counsel stands at the forefront of this tradition with extensive knowledge of the laws governing Delaware trusts, and a commitment to enhance The Delaware Advantage by active participation in the drafting committees responsible for keeping Delaware trust law on the cutting edge.

Administrative Flexibility

Delaware statutes provide a platform for the separation of trust administrative duties among trustees, trust advisers, and trust protectors. In a properly drafted trust instrument, a trustee can perform the traditional fiduciary functions related to investment and administration, while a trust adviser is responsible for managing specific assets or assets classes, such as concentrated positions and closely held business interests. Morris James attorneys advise fiduciaries and trust beneficiaries in creating trust documents that provide for efficient and productive division of administrative duties while preserving maximum flexibility and protection.

The Delaware Dynasty Trust

Delaware law permits trusts of indefinite duration. We assist our clients in developing such “dynasty” trusts, successfully preserving and transmitting family wealth from generation to generation without erosion by estate or inheritance taxes. In addition to the robust tax advantages, the dynasty trust can also facilitate creditor protection for succeeding generations.

Delaware's Decanting Statute

Delaware’s “decanting” statute makes it possible to move existing trusts to Delaware in order to take advantage of Delaware’s trust laws and, in many cases, to improve and modernize administrative provisions. We work with trustees and trust beneficiaries to design innovative and practical trust provisions, tailored to client-specific needs, through non-judicial consent when available pursuant to newly enacted statutory authority, and through consent proceedings in the Court of Chancery.

Tax Reduction Structures

Delaware’s tax laws make it possible in many cases for trust beneficiaries who do not live in Delaware to reduce or avoid resident-state and local income taxes on income allowed to accumulate in the trust for later distribution. Morris James' attorneys have the expertise in the complexities of state income taxation to advise trustees and beneficiaries on tax reduction structures and to implement tax-savings strategies in appropriate situations.

Converting Income Only Trusts

Delaware statutes provide a procedure for converting “income only” trusts to the benefits of “total return” investing. Many established trusts provide that the beneficiary will receive the income produced by trust investments – generally limited to dividends and interest. An investment climate in which dividend and interest yields are meager to invest for robust growth unduly penalizes trust beneficiaries who are dependent solely on trust income. We assist trustees and trust beneficiaries in converting these trusts to trusts which generate distributions based on the portfolio’s overall returns, including capital appreciation, in ways that protect the interests of both income and remainder beneficiaries.

Asset Protection Trusts

Delaware has been a leader in establishing asset protection trusts. In appropriate circumstances, these allow individuals to obtain asset protection benefits previously available only through the use of off-shore trusts dependent on the laws of non-U.S. jurisdictions. Morris James attorneys counsel clients in determining whether asset protection trusts are appropriate, help in developing effective asset protection strategies through the use of trusts and otherwise, and assist in implementing asset protection plans.