Northern Trust Claims Delaware Trust Clients In Delaware Stand To Benefit From The State's Tax Structure

Financial services group Northern Trust has established a limited purpose trust arm in Delaware in an effort to take advantage of the state's trust friendly laws. "Many investors have come to find that Delaware offers a trust friendly jurisdiction that

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Financial services group Northern Trust has established a limited purpose trust arm in Delaware in an effort to take advantage of the state’s trust-friendly laws. “Many investors have come to find that Delaware offers a trust-friendly jurisdiction that promotes creative estate planning and offers attractive income tax advantages for trusts,” said Daniel F.Lindley, president of Northern Trust in Delaware and the man who helped ease the restrictions on the trust environment in the state. He added that Delaware’s attitude toward the trust sector might be “of particular interest to those seeking to preserve trust assets and who live in high income tax states such as California, New York, New Jersey and Massachusetts.”

Delaware law has distinct advantages for personal trusts, and does not impose any state income tax on income accumulated in and capital gains earned by irrevocable trusts for non-resident beneficiaries. A Delaware trust can, structured in a particular way, avoid any state income tax, thus enhancing its asset growth over the term of the trust.

Unlike many states with laws that limit the lifespan of a trust, Delaware law doesn’t place time limits on dynasty (or perpetual) trusts holding intangible assets or other personal property. Assets transferred to an exempt dynasty trust can benefit generations of a grantor’s descendents without incurring additional gift tax, estate tax or generation-skipping tax.

Delaware law also allows trustees to take direction from outside advisors, consultants or committees, who have the authority to select investment managers and manage trust assets. This “administrative trust” structure can be helpful in the case of a trust that holds a concentrated position in a security or a closely-held family entity or operating business.

Delaware law offers substantial protection for trust assets against creditor claims. A Delaware asset protection trust presents an alternative for investors who do not want to take on the expense, complexity and risk of offshore trusts to protect their trust assets.

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