Bad Question: “Can you do a BDIT in Nevada for $4,000”

Getting a good result from your estate planning starts with asking good questions that a tailored to your circumstances. Questions posed by AI to ask an estate planning attorney, especially when the prompts to ask the questions were posed by someone with more limited estate planning expertise, may lead you to a less than ideal result. You have to ask good questions to get a good answer and a good estate planning result. A BDIT is a beneficiary defective irrevocable trust. It is a trust someone else creates for you but which is grantor as to you. That means all the income of the trust is to be taxed to you. That may occur because the person setting up the trust for you, e.g. your mother, gifts $5,000 to the trust and you are given the right to with draw the money from the trust. But there are technical tax issues with that result and not all experts agree. If you are very wealthy and plan to sell valuable assets to an irrevocable trust the risk of whether or not the BDIT will be a grantor trust may be too great a risk for that use of the technique. Some suggest that a BDIT is safer from creditors because you did not create the trust but there are other options that might be better and not all experts agree that a BDIT is safer.