Alaska Trust Company's mission is to provide reliable wealth management approaches and innovative trust and investment management services.
Alaska is the leader in updating its trust laws that provide all Americans the ability to access unique estate and financial planning options as well as providing the most comprehensive asset preservation statutes in the country.
We are committed to providing the finest services to our clients. With our unique philosophy of customizing solutions and internal and external expertise, we are able to "think outside the box" to provide strategies that will have a positive impact for our clients in meeting their financial and estate planning goals.
PLR 200944002; IRS has agreed that the Grantor can be a Trust Beneficiary of an Alaska
Self-Settled Spendthrift Trust and the assets of the trust will not be included in the
Grantor's Estate. Alaska is the only state that has received a favorable ruling from IRS.
Alaska Was the First State to Provide For Self-Settled Spendthrift Trusts
Alaska has the best trust spendthrift statutes for both the grantor and other trust
beneficiaries. Alaska provides for "self-settled" spendthrift trusts which allows the
grantor to set up an irrevocable trust, be a discretionary beneficiary and avoid having the
assets be subject to creditor claims of either the grantor or any other beneficiary. Also,
the assets in such a trust may be excluded from the grantor's taxable estate even though
the grantor is a trust beneficiary. Therefore, there is no reason to go "offshore" (that is, to
create a self-settled trust in a jurisdiction outside of the United States). Alaska has no
special "class" of creditors which, unlike the laws of other states, would permit those
creditors to attach the assets of the trust. Alaska allows creditors to attach trust assets in a self-settled trust only upon proving by actual fraud (and not "constructive" fraud).
Property subject to the so called "Crummey" or "5 X 5" withdrawal powers is not subject
to creditor claims of the beneficiaries who holds such powers. Courts cannot compel
distributions or attach beneficial interest. A beneficiary may be given a special power of
appointment and the trust assets will still be protected from creditor claims. Alaska is the
only state that defines an "existing creditor" which effectively puts a defined limit on
when a claim against a self-settled trust may be made.
Alaska Has No State Income Tax on Trust Income
Therefore, trust beneficiaries can see the earnings in the trust compound free from state
and local income taxes thereby providing extraordinary year-on-year returns. In addition,
Alaska has no state gift tax and no intangibles tax.
Alaska Permits Perpetual (Dynasty) Trusts
Using perpetual trusts can significantly increase wealth passing from generation to
generation by avoiding unnecessary estate, gift and generation-skipping transfer ("GST")
taxes. In Alaska, trusts can last forever; however if a beneficiary exercises a special
power of appointment the trust is limited to 1000 years. An Alaska Perpetual Trust is an
excellent vehicle to enhance the benefits of the Federal exemption from the (the "GST"
tax). If a family uses only $1 million of the "GST" exemption after 120 years with an
after-tax return of 6%, the trust would be worth over $1 billion. If a trust was not used; the
value of the property would be only about $68 million.
Additional Trusts with Creditor Protection
In Alaska the Grantor may retain an interest in the following types of trusts and have
protection from creditor claims:
Alaska Creditor Protected IRAs.
Alaska Law has a provision that the trust laws of no other state has: it permits an
individual whose IRA is not protected from creditor claims under the law of his or her
own state (such as California) to use Alaska law to provide that protection. The reason is
that Alaska's self-settled trust law applies to any IRA that is in the form of a trust that is
governed by Alaska law.
Opt - In Community Property Trusts
Alaska is the only state that allows couples to opt into community property for some or
all of its assets, by using an Alaska Community Property Trust. Community property can
provide unique income tax and estate tax savings. For example, upon the death of one
spouse, the entire community property asset is "stepped-up" in basis and not just the half
of the asset included in the gross estate of the spouse dying first.
Best Trust Decanting Statute
Alaska has the most powerful decanting law, which is the paying of trust assets from one trust to another. Alaska's decanting statute (paying trust property to another trust) is the broadest and most comprehensive of all decanting laws. Many times the terms of the trust do not permit the trustee and beneficiaries to take advantage of planning opportunities. The Alaska decanting provisions can be made to apply to a trust created outside of Alaska which can be used to provide significant advantages to the trust beneficiaries.
Alaska has just adopted legislation that permits individuals to have their wills admitted to
probate before they die essentially eliminating any risk of a will contest, which normally
is an emotional and financial wreck for the family members involved. The reason, of course, is that the person who signed the will can testify before the court establishing the
document is a valid will. Although three other states (Arkansas, Ohio and North Dakota)
also permit such pre-death probate, Alaska has become the first state to permit nonresidents of its state to have their wills admitted to original probate procedures. Alaska,
like New York, has long permitted non-residents of its state to have their wills admitted
to original probate and several individuals have used this process. In addition, Alaska has
become the first state to have an explicit procedure to allow individuals who have created
trusts during their lifetimes to have the trusts "proved" before they die. This too reduces
the risk of post-death squabbles over the spoils of an owner's death and ensures his or her wishes will be followed. Alaska also has one of the strongest "no contest" legislation for
trusts-which essentially allows any beneficiary to be "disinherited" for taking action
prohibited by the trust instrument.
Trust Incontestability Clause
This provision provides that lifetime trust provisions that "penalize" (for example,
"disinherits") a beneficiary for taking certain action, such as "contesting" the trust or the
decedent's will or suing another family member will be enforced even if probable cause
exists for the beneficiary to have instituted the proceeding.
Alaska's Unique and Flexible Trust Provisions
Grantors and beneficiaries may increase or decrease trustees duties and
responsibilities providing for the most reliable ways to accomplish their goals.
Alaska law permits a grantor to separate the trust's investment duties, distribution
duties and administrative duties by appointing different trustees for each area of
those areas ofresponsibility. A trustee that has not been given a responsibility
cannot be held liable under Alaska law for the other trustee's actions.
Non-residents of Alaska can have their will probated under Alaska law. The
advantages of this legislation are:
Life Insurance Trusts
Alaska has one of the lowest life insurance premium taxes. With Alaska's low tax and
Alaska Trust Company's experience in handling large life insurance policies make Alaska
and Alaska Trust Company the only choice in setting up an Irrevocable Life Insurance
Total Return Trusts
In Alaska, traditional income trusts can be converted into "total return" trusts which
means the trust will pay the "income" beneficiary a percentage of the annual value of the
trust. This allows the trust to align the interests of all beneficiaries' whether income or
remainder beneficiaries. In other words the trustee may invest the assets that will provide
the best overall return (whether by current income or appreciation) for all beneficiaries,
thus reducing tensions between current and future beneficiaries.
Best Limited Partnership and Limited Liability Statutes
Alaska's laws give Limited Partnerships (LP's) and Limited Liability Companies
(LLC's) maximum flexibility and asset protection. Courts cannot terminate Alaska LP's
or LLC's thereby preventing creditors of the partners or member from attaching the
assets of the LP or LLC. Unlike the default rules under most state laws, an Alaska LP or
LLC does not go out of existence upon the death of a general partner of a limited
partnership or the managing member of a limited liability company. Alaska has
eliminated any right to demand to be bought out on 6 month or other notice. In fact,
under default state law, a partner is entitled to distributions only as provided by the
governing document. These provisions provide for optimal tax treatment and valuation
discounts. In Alaska, LP's and LLC's can be set up "on-line" for immediate formation.
By statute, the only remedy for a creditor who attacks a partner's interest in an LP or
LLC is a "charging order", which is a court judgment against the LP or LLC.
Alaska provides the highest confidentially to grantors and beneficiaries because trust
court filings generally are not required. Privacy and confidentiality are important
concerns of Alaska Trust Company. If a court filing is needed, it can be done efficiently
and in a cost efficient manner because of Alaska's flexible court processes.
Customized and Innovative Investment Management
Alaska Trust Company provides a Unified Management Account approach. This allows
for the best of two worlds: access to the expertise of the nation's finest money managers,
yet still maintaining complete control over the investment process. This provides for
Advantageous Charitable Remainder Unitrusts
Alaska law allows capital appreciation to be considered income. This allows for an
attractive income tax deferral strategy when using Net Income with Makeup Charitable
Remainder Unitrust (NIMCRUT).
Alaska / Alaska Trust Company
You do not have to travel to Alaska to take advantage of our unique investment approach
and Alaska's innovative trust laws (although Alaska is a wonderful place to visit). Alaska
Trust Company has no proprietary products and, therefore, has no conflict of interest in
recommending investment vehicles. Our fees are competitive and we are committed to
providing the highest level of service.