1. Internal Revenue Code § 2010(c) provides for an “applicable exclusion”, which is the cumulative amount that can pass free of gift and/or estate tax. The applicable exclusion is $5,430,000 for 2015, $5,450,000 in 2016, and $5,490,000 in 2017. For the applicable exclusion in prior years, see Tax-Related Planning.
  2. An “independent trustee” is generally any trustee other than a beneficiary or someone who is “related or subordinate to” a beneficiary.
  3. Normally the bypass trust is funded with assets having a value up to the applicable exclusion for gift and estate tax purposes. [See footnote 1.] This allows the surviving spouse or partner the benefits from the assets without including the value of those assets in the survivor’s estate for federal estate tax purposes.
  4. Gifts of stock, cash, and other property classified by the law as “intangible personal property” cannot be made on a separate list under the terms of a will.
  5. This can be done under a revocable trust or under your will, but in Nevada and many other states trusts created under wills (referred to as “testamentary trusts”) are subject to continuing supervision of the probate court.
  6. The trust picks up the tab for airfare, meals, and lodging when the nonresident trustee does have to come to Nevada. Also, there is no requirement that the trustee has to economize on such expenses.
  7. My experience is that more mismanagement occurs by untrained family members than by corporate trustees, accountants or others, so I recommend that family fiduciaries be selected carefully.
  8. For self-settled spendthrift trusts (asset-protection trusts), the settlor (creator) of a trust cannot make unilateral decisions as to distributions to himself or herself, and a “distribution trustee” is required.