Considering a Family Advancement Sustainability Trust (FAST) for Your Estate Plan
Posted by Robert Ingrasci on July 10, 2024
Are you retired, a business owner, regardless of your status, your estate plan should achieve both technical and personal objectives. Technically, you aim to minimize gift and estate taxes and protect your assets from creditors and frivolous lawsuits. Considering personal family dynamics, you may want to prepare your children or grandchildren to manage wealth responsibly, promote shared family values, or encourage charitable giving. A Family Advancement Sustainability Trust (FAST) could be a valuable addition to your estate plan.
Funding a FAST
Establishing a FAST during your lifetime helps ensure it meets your objectives and allows you to educate advisors and family members on its purpose and principles. Typically, a FAST requires minimal initial funding, with substantial funding occurring upon your death. Funding a FAST with life insurance or through a properly structured irrevocable life insurance trust (ILIT) is often more effective, preserving assets for your family's benefit.
Governance Structure
FASTs are usually set up in states that permit perpetual or "dynasty" trusts and have directed trust statutes. These statutes allow the appointment of advisors or committees to guide trustees on specific matters. A typical FAST governance structure includes four decision-making entities:
1. Administrative Trustee: Often a corporate trustee handling administrative tasks but not investment or distribution decisions.
2. Investment Committee: Comprising family members and a professional investment advisor to manage the trust's assets.
3. Distribution Committee: Including family members and an outside advisor to ensure funds benefit the family and align with the trust's objectives.
4. Trust Protector Committee: Composed of trusted advisors acting on behalf of the grantor posthumously, making decisions on trustee appointments, amendments, and tax planning.
Bridging the Leadership Gap
The death of a senior family member can create a leadership void. A FAST helps bridge this gap by establishing a governance structure and funding educational and personal development activities for younger family members. For more information on integrating a FAST into your estate plan, consult your Lumsden McCormick estate planning advisor.
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Bob is an experienced tax professional who devotes his professional time to structuring tax strategies in the areas of compliance, consulting, and planning. Bob works closely with a broad range of high-net-worth individuals and multi-generational families, specializing in the areas of gift and estate planning, charitable gift planning, trust and estate administration, individual taxation, and wealth preservation. Bob serves as a practice leader in the Family Wealth and Estate Planning group. Bob joined Lumsden McCormick in 2008 and was named partner in 2022.