The Jacksons want to establish a trust to provide for their children in case of their premature death. Which of the following would you recommend as the most appropriate trust given the Jacksons’ overall situation and objectives? Provide a rationale for your answer. an irrevocable life insurance trust granting Crummey powers to the children a grantor retained income trust (GRIT) with Ashanti and Blake named as beneficiaries a revocable living trust naming a third party as successor trustee, with Avery and Jaylen as the primary beneficiaries while living and the children listed as remainder beneficiaries a revocable living trust naming the children as beneficiaries and Jaylen and Avery as the trustees
Husband, Jaylen has 128k of life insurance and Wife, Avery has 50k of life insurance.
ESTATE PLANNING INFORMATION Wills were last completed five years ago. They live in a common-law state. Jaylen’s will leaves everything to Avery conditioned on a six-month survivorship clause—otherwise, equally in separate trusts for the two children. Avery’s will is identical to Jaylen’s, leaving everything to Jaylen as long as he survives her by at least six months. Otherwise, a trust for the children will hold their assets
ASSETS1
Liquid assets Joint checking account $2,500
Joint savings account 5,000
Total liquid assets $7,500
Investments Avery’s IRA $85,000
Jaylen’s IRA 105,000
Troy Metals Inc. 250,000
Total investments $440,000
Use Assets Residence1 $330,000
Personal property 55,000
Vehicles 25,000
Total use assets $410,000
Total assets $857,500
Liabilities Credit cards2 $8,000
Mortgage on residence3 60,000
Auto loan4 3,000
Total liabilities $71,000
Net worth $786,500
Total liabilities and net worth $857,500
Case Question:
The Jacksons want to establish a trust to provide for their children in case of their premature death. Which of the following would you recommend as the most appropriate trust given the Jacksons’ overall situation and objectives? Provide a rationale for your answer.
- an irrevocable life insurance trust granting Crummey powers to the children
- a grantor retained income trust (GRIT) with Ashanti and Blake named as beneficiaries
- a revocable living trust naming a third party as successor trustee, with Avery and Jaylen as the primary beneficiaries while living and the children listed as remainder beneficiaries
- a revocable living trust naming the children as beneficiaries and Jaylen and Avery as the trustees
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