Childless Couple's Trust

The childless couple - or the couple whose children are already quite well fixed - might consider a "charitable remainder trust." This estate planning idea, which benefits a widow by saving a sizable slice of local estate tax, has come in for some favourable comment among the pros lately. And - you may be sure - from the fund raisers.

If a single man dies and leaves, say, £500,000, the local estate tax comes to roughly £115,000. if he's married, 50% goes to his widow tax-free - under the marital deduction - and the tax drops to £45,000. Now, figure in the charitable remainder trust. It works this way: The part of the estate that doesn't pass under the marital deduction is put into a trust - with the income going to the wife during her lifetime. When she dies, the principal goes to charity. The result is another huge slice from the tax. In the example of the married man above, the Treasury's bite goes down to around £5,000. Thus, the widow has substantially more income available for as long as she lives.

The plan has its limitations - hence a note of caution. For instance, the trustee's power to "invade" principal for the wife's benefit must be restricted, and the amount going to charity firmly fixed. The idea, though, is solid and workable - if you get skilled advice.

An Umbrella Trust

The "sprinkling" Of Wealth

Estate advisers lately have been focusing on discretionary trusts - those that give wide latitude to the trustees. They point to some clear advantages. For example, with a "sprinkling" trust the trustee can distribute income and principal to members of the family at his discretion - depending on their needs at the time. Two major points:

- When both parents die, the trustee can divide family wealth among the children without making equal distributions. The children, whose own wealth may vary a lot, may be much better off than with the traditional even split. "We're getting away from the ironclad even split - and it makes sense," says Chase Manhattan Bank's top trust officer, James North.The "sprinkling" Of Wealth