A new technique—the beneficiary defective inheritor’s trust (BDIT)—in estate planning has the potential to turn thousands of dollars into millions. A relative would set up the trust with an amount of cash and give the beneficiary, the child, immediate withdrawal power, and when the right to withdraw lapses, the child would then become the exclusive grantor of the entire trust. This would allow young entrepreneurs to “defectively” modify the withdrawal power and continue to withdraw limited funds for HEMS. For income tax purposes this technique would seem to work, but it comes with a lot of risk. Read the article to find out more about BDIT’s pros and cons.
See Allyson Versprille, Estate Planning Tool: Either Genius or Too Good to Be True, Bloomberg BNA, June 15, 2016.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.
