At Durfee Law Group, we’ve learned that “preventive law” or “proactive law” trumps “reactive law.” Most people consult lawyers only after trouble arises, rather than preventing it. This benefits attorneys but not clients. A prime example is the high cost of administering an estate with inadequate planning.
Preventive law mirrors preventive healthcare. Eating well and exercising reduce illness and aid recovery. Preventive healthcare doesn’t grant immortality but enhances longevity and quality of life. Similarly, preventive law organizes legal affairs to minimize trouble and ensure efficient, cost-effective recovery when issues arise. Brushing teeth costs less than treating decay; organizing legal matters costs less than ignoring them, hoping they’ll resolve themselves.
False Starts
People often misstep in legal planning, like forming an LLC before a Trust. Ideally, all assets, including LLCs, should be owned by a Trust or an entity it controls. Preventive planning starts with establishing a Trust, then creating an LLC owned by it. LLC ownership variations exist, but that’s for future discussion.
Enter the Trust
A Revocable Living (Dynasty) Trust is a cornerstone of preventive law. Properly used, it avoids probate, family disputes, estate tax losses, and intrusive guardianship or conservatorship proceedings. It also supports aging individuals and ensures a smooth, private, cost-effective transfer of assets to heirs.
The Dynasty Option
A Trust with “dynasty” or “legacy” provisions can grow wealth across generations, keep it in the family, and shield both family and wealth from divorce, medical issues, special needs, substance abuse, lawsuits, bankruptcy, and other financial risks. Traditional divide-and-distribute Trusts often destroy wealth by the third generation. Dynasty provisions offer a powerful preventive step beyond standard Trusts.
Are We There Yet?
It’s tempting to assume a Trust completes estate planning. While a well-designed Trust is versatile, it can’t do everything. Additional legal structures are often essential for preventive law benefits in cases like:
- Businesses, especially with partners
- Rental properties
- Income tax planning
- Assets exceeding estate tax thresholds (including life insurance)
- Professional or special liabilities
- Asset protection
- Unmarried couples
- Blended or non-traditional families
- Minor children
- Multi-generational assets or businesses
- Sale of highly appreciated assets
- Charitable intent
- Rapid income or net worth growth
- Over-funded retirement plans
- Location-specific issues (city, state, or country)
What Else Is There?
Numerous structures complement a Trust, too many to detail here. Common “next step” options include:
- Irrevocable (Dynasty) Trust: Excludes assets from the taxable estate and protects them from creditors.
- LLCs in General: Manage risk and taxes when properly structured and operated, avoiding common ownership or operational errors.
- Life Coach LLC: Structured per IRS guidelines to allow tax deductions for families raising children.
- Family Office: Manages control, tax planning, asset protection, and family ventures, suitable for multi-generational assets, not just the ultra-wealthy.
- Family Bank: A modernized Family Limited Partnership, enabling tax-free wealth transfers across generations with robust asset protection.
- Charitable Trust: Avoids capital gains tax, balancing personal needs with charitable giving.
- Family Foundation: Redirects assets from taxes to support causes you value.
Putting It All Together
Having the right entities is only part of the equation. They must be integrated and operated correctly for optimal results. Haphazard assembly undermines utility. Experienced legal and tax counsel ensures proper design, construction, and operation, creating a seamless, effective system.
Where You’re Going With It
Like a car, these structures offer flexibility to minimize taxes, grow wealth, and enjoy the rewards of your efforts.
What Does It Cost?
Preventive law involves three costs:
- Setup Cost: A one-time fee, typically paid to the law firm.
- Accounting and Tax Reporting Cost: Annual fees to CPAs for accounting and tax returns, ongoing indefinitely.
- Complexity Cost: These structures are inherently complex, which drives their effectiveness. Your tolerance for complexity is as critical as your budget.
Simplification
Are the costs worth the benefits? This determines whether to go beyond a Trust. More isn’t always better. Sometimes, entities outlive their usefulness and should be wound down.
Made to Order
Niche vendors may push one or two structures as the sole solution, akin to a plumber claiming pipes build a house. Effective preventive law requires multiple, purpose-specific entities, integrated to work together. There’s no one-size-fits-all or magic entity. Planning beyond a Trust is a customized process, demanding expertise in all elements.
Beyond the Trust © 2025 by Rick Durfee is licensed under CC BY 4.0 
Beyond the Trust