Four Types of Legacy Trusts

Basic Legacy Trust

The trust that started it all. Designed specifically for MPI Plans enabling you to name: (1) who will manage the MPI Plans upon your incapacity or death; (2) who will inherit; and (3) how much and when your loved ones will receive funds from the trust. It is designed to protect the MPI Plan from your loved one’s creditors, lawsuits, bankruptcy, divorce and government aid programs. With their cooperation, the Basic Legacy Trust enables you to invest in MPI Plans on the lives of descendants while you retain the income and control of the MPI Plan. The Basic Legacy Trust can invest its funds into additional MPI Plans for your loved ones too. Mr. Skabelund normally charges $290 for his initial consultation and $5,000 for a trust with similar features. However, Suncor Financial clients receive a free consultation and pay only $1,500.

Dynasty Legacy Trust

This trust has all the features of the Basic Legacy Trust with one important twist.  Rather than designate specific amounts to each child or loved one, this trust is designed to last multiple generations creating a long lasting legacy.  Authors Garrett B. Gunderson and Michael G. Isom explain in their groundbreaking book, What Would the Rockefellers Do?: How the Wealthy Get and Stay That Way … And How You Can Too, that although the Vanderbilt and the Rockefellers had comparable wealth, they had two very different trusts.  The Vanderbilts had a trust similar to the design of the Basic Legacy Trust; meaning each successive generation received a specific share.  This motivated each generation to spend.  Within three generations the Vanderbilt empire was depleted.  On the other hand, the Rockefellers’ trust continues strong today and has blessed countless descendants of John D. and Laura Spelman Rockefeller.  The Dynasty Legacy Trust does not split into specific shares, but rather typically names all descendants as beneficiaries.  You create rules to which your descendants may receive funds from the trust.  Common examples include paying for education, medical bills, a wedding, a down payment on a house, a specific percentage of income may be distributed, etc. This trust also creates a family bank as described in the book.  Based upon terms and conditions you create, beneficiaries may borrow money from the trust.  The Dynasty Legacy Trust is designed to continue to grow, even investing in additional MPI Plans for your descendants! Mr. Skabelund will meet with you for approximately one additional hour beyond the initial consultation to design the rules and management of your Dynasty Legacy Trust.  He normally charges $10,000 or more for a dynasty trust.  However, Suncor Financial clients pay only $3,500.

ILIT Legacy Trust

MPI Plans are phenomenal at creating wealth. Unfortunately, if your assets exceed the Federal Estate Tax exemption amount, your estate will be assessed an estate tax. In other words, the fair market value of your home, cash, securities, retirement plans, vehicles, business interests, real estate, personal property and even your MPI Plan will be included in your taxable estate. The Federal Estate tax rate is currently 40%. (It was 55% in 2001. Some states also charge an estate and inheritance tax too. Maryland, the highest, currently has a 16% rate.) In 2021, the Federal Estate Tax exemption is $11.7 million per person or a combined $23.4 million for married couples. This means that currently a single person’s estate will be taxed at the Federal Estate tax rate of 40% on everything exceeding $11.7 million. ($23.4 million per couple.) However, the Federal Estate Tax exemption amount can vary. The current rate is schedule to drop to $5 million per person in 2026. In 2001, the exemption amount was $675,000 and was only $1.5 million as recently as 2005. Clients seeking to reduce their estate tax to the greatest extent possible place their MPI Plans in the ILIT Legacy Trust at the outset. Such a strategy not only removes the initial investment out of their taxable estate, but also all future investments and MPI Plan’s growth. The result can mean millions saved in estate taxes. Mr. Skabelund typically charges $5,000 for an ILIT (an irrevocable life insurance trust). Suncor Financial clients pay $3,500 and this price includes an ILIT Legacy Trust for both spouses at this price too. (Each spouse owning a MPI Plan will need an ILIT Legacy Trust. Be aware that there are some constraints with an ILIT that may not make it a viable option for some clients.)

ILIT Dynasty Legacy Trust

The ILIT Dynasty Legacy Trust combines the benefits of both the Dynasty Legacy Trust and the ILIT Legacy Trust.  It not only creates a trust that will manage and grow your MPI Plans for multiple generations like the Rockefellers, but also avoid estate taxes too.  It truly is the best of both worlds.  Suncor Financial clients receive a reduced price of $4,500.