What Is a Beneficiary Defective Inheritor's Trust?

Traditional trusts always suffer from one major disadvantage.

You must relinquish the right to:

• Control
• Use
• Or direct the trust assets

That’s not the case with BDITs. You maintain control.

The BDIT’s benefits are made possible by one critical principle: Assets transferred by a third party (such as a parent) to a properly structured trust for your benefit enjoy transfer-tax savings and creditor protection, even if you maintain control over those assets.

IRS rules prohibit you from transferring assets to beneficiaries on a tax-advantaged basis if you retain the right to use or control the assets. But those rules don’t apply to assets you receive from others in a beneficiary-controlled trust. The challenge in taking advantage of a BDIT is to place assets you currently own into a third-party trust.

This trust is especially useful for assets that are appreciating quickly in value, or assets that currently have a low value but are anticipated to rapidly increase in value in the near future.

The BDIT allows the beneficiary to retain the right to manage and use assets held by the trust and to receive trust income and even principal in the amount needed for:

• Health
• Education
• Maintenance
• Or support

Thus, control of the assets, beneficial enjoyment, creditor protection, and estate tax benefits are all achieved through utilizing a BDIT.

Reach out to our experienced team at Castro & Co. by calling (833) 227-8761 to schedule your confidential consultation today!