OVER THE RIVER AND THROUGH THE WOODS: CREATIVE ESTATE PLANNING IDEAS FOR GRANDCHILDREN

By Steven D. Anderson and Sinclair Hwang^*

I. INTRODUCTION

Who among us has not received the harried call from a client asking in panicked tones about the horrors of an impending distribution to a young beneficiary, with images of the next Paris Hilton dancing in the minds of the senior generation members? Gifts to descendants are fraught with problems — and opportunities — whether they involve an outdated gift trust, a custodial arrangement, or some other form of titling. It is the classic case of too much of a good thing, both in terms of distribution timing and of value.

Erecting roadblocks on a descendant’s road to perdition, as well as the simple desire to transfer valuable assets efficiently, are constant concerns for estate planners in California. Additionally, at the dawn of the new decade estate planners and their clients are faced with tremendous uncertainty regarding the federal estate tax and generation-skipping transfer (GST) tax, due to the suspension of those taxes in 2010. We have not encountered since the days of Pancho Villa the ability to transfer assets at death without federal estate tax, and the federal GST tax has been a fact of life for estate planners and their clients since 1986.