Wide-Ranging Practice
Richards, Layton & Finger trusts and estates lawyers are committed to helping successful individuals manage and protect their wealth through effective estate planning and tax strategies. We help clients with a high net worth (typically more than $10 million) prepare estate plans that reflect the unique advantages of Delaware law to maximize financial benefits while minimizing taxes and balancing fiduciary responsibilities with beneficiaries’ needs. Our practice extends well beyond Delaware, as we represent clients who reside in many other states as well as in Europe, South America and other parts of the world.
In counseling our clients, we work closely with investment advisors, accountants, life underwriters and bank representatives to develop coordinated and comprehensive estate plans. Our firm also provides fiduciary advice to some of the nation's most prominent banks, trust companies and financial institutions. We also represent individual and corporate executors and trustees in the settlement of estates and the administration of trusts.
Each client who relies on Richards Layton gets advice from an experienced senior lawyer who typically works with just a single associate or paraprofessional. The result is efficient, customized service that reflects a full understanding of Delaware law and its advantages within the parameters set by the state and federal tax codes.
Delaware Trust Focus
Delaware trust law provides for perhaps the most specialized and sophisticated trust structures permitted in any state. Richards Layton trusts and estates lawyers are skilled at helping clients decide which trust structures and which Delaware advantages offer the best estate planning options for the client’s particular circumstances.
Because Delaware allows trusts to continue in perpetuity (meaning that property can be held in trust and transferred to successive generations without being taxed each time if allocations of certain tax exemptions are properly made), many high net worth individuals seek our help in establishing trust arrangements in the state. We also regularly prepare and present petitions in the Delaware Court of Chancery to transfer trust situs and change trust governing law, so that our clients who formed trusts in other jurisdictions can benefit from Delaware’s favorable trust laws.
CASE STUDY: Delaware Trust Advantage
- Client: An individual with a high net worth.
- Issue: Client desires to transfer financial assets to children and grandchildren in further trust but would like to direct the investment of the trust during his lifetime. Client has an appreciating asset and would like to make a gift for federal gift tax purposes and for federal generation-skipping transfer tax purposes.
- Challenge: Devise a transfer that will maximize financial flexibility, minimize taxation, maximize use of federal estate tax exemption amounts and generation-skipping transfer tax exemption amounts, and maintain more effective control than is possible under most typical estate planning documents.
- Solution: We established a Delaware Trust that permits the Grantor, while living, to direct the investment of the assets, we transfer the appreciating assets to the trust and allocate generation-skipping transfer tax exemption to the transfer, and we draft the trust in such a manner that the trust will be treated as a Grantor Trust under the Internal Revenue Code.
- Result: In addition to the unique ability to segregate administrative functions under Delaware Law, we also achieved our client’s wealth planning and estate planning goals by transferring appreciating assets to a trust for the benefit of his children and grandchildren. Moreover, the Grantor will continue to be taxed for federal and state income tax purposes on income earned by the trust, notwithstanding the fact that such amounts will be set aside for his children and grandchildren. Such additional payments of tax will not be considered gifts for federal gift tax purposes.
Effectiveness in the Court of Chancery
The Delaware Court of Chancery is uniquely structured to take a sophisticated business perspective with regard to estate and trust matters, and Richards Layton lawyers pursue all the advantages that the Court of Chancery offers. We represent both fiduciaries and beneficiaries in the Court of Chancery in disputes involving issues such as will contests, construction of trusts and wills, and alleged breaches of fiduciary duty. To take advantage of Delaware’s favorable trust laws, we also handle routine consent petitions in Chancery Court that provide for trust modernization, segregation of administrative and investment functions, and change of situs and governing laws.
Estate Planning
We help clients manage and protect wealth through personalized estate planning solutions that are carried out as each client intends, maximizing financial benefits while minimizing taxes and balancing fiduciary responsibilities with beneficiaries’ needs. Although many plans provide for the distribution of assets after death, we also can create a variety of trusts and lifetime gift arrangements to minimize transfer tax impact and establish independent asset management arrangements that allow clients to retain some measure of control through the appointment of advisors and protectors, even though they are no longer the beneficial owners of the assets in the trust.
We pay close attention to the details in drafting estate plans and, when these plans need to be implemented through an estate or trust administrator, we work with executors and administrators to make sure all those details are handled properly. That includes planning for liquidity and for payment of estate taxes for closely held business owners, and reducing the value of a family business included in the client’s estate for estate-tax purposes. We also work with clients interested in creating a variety of charitable trusts and private foundations. Our lawyers advise on deferred compensation arrangements as well—an important aspect of estate and tax planning for executives.
Fiduciary and Administration Guidance
Richards Layton handles all aspects of probate and trust administration on behalf of both heirs and trustees, including such major financial institutions as U.S. Trust, J.P. Morgan Chase and Wilmington Trust. We represent private and institutional fiduciaries and others involved in will contests, and work to resolve breach of fiduciary duty claims and probate controversies.
Our lawyers advise fiduciaries on issues relating to tax-saving strategies, post-mortem tax planning, and the reformation and relocation of trusts to Delaware to “modernize” administrative provisions and take advantage of favorable Delaware trust law. In addition, because we closely monitor all legislative and regulatory actions that affect Delaware trust administration, we can help shape evolving law to reflect our clients’ concerns while advising them on any specific law’s application.
Tax Planning Insight
Tax minimization is at the heart of much of the estate planning that we do for our clients. We help them make the most practical decisions on creating trusts and lifetime gifts to minimize transfer tax impact and maximize family wealth planning. We recognize the importance of investment flexibility, consistent with tax minimization constraints, and the importance of independence and objectivity in structuring asset management arrangements. We also form charitable lead trusts and charitable remainder trusts to handle tax-deductible gifts to various charitable organizations. With our help, clients can maximize the advantages that the Tax Code offers.
Richards Layton represents many private foundations and charitable trusts, making sure that their organization and structure meet all of the requirements for tax-exempt status. Our lawyers file applications for tax exemption with the IRS and respond to audits and inquiries involving Section 501(c)(3) charitable organizations. When taxing authorities raise questions or concerns, we provide representation before the Delaware Division of Revenue, the Delaware Tax Appeal Board and the Internal Revenue Service.
Summary: Highly Tailored Solutions
The goal of any estate plan is to protect and preserve financial assets in the way that best meets the needs of each individual and family. Richards Layton trusts and estates lawyers draw on extensive experience, careful analysis and knowledge of Delaware law to accomplish our clients’ estate planning objectives. In managing all the legal issues involved, our lawyers custom tailor wills, trust agreements and business arrangements to each client’s specific needs.