HYCET Trust (“Have Your Cake and Eat It Too”) is a revolutionary Trust for today’s times. Until the end of 2012, taxpayers can give away up to $5M each without paying gift taxes. But in 2013, the exemption will reduce to $1M. Giving away $5M is a tough decision because under traditional gifting plans, once you make the gift, you have no way to retrieve it.

The HYCET Trust is a Trust established in a qualifying jurisdiction that allows the taxpayer to make a completed gift, tax free up to the available exemption ($5M now) while still retaining a “’beneficial interest” in the trust. This way, if the taxpayer should ever need back all or part of the assets that were gifted to the trust, the independent trustee may elect to distribute back some or all of the money to the donor.

The HYCET Trust is also an asset protection Trust, protecting assets held by the trust from lawsuits brought against any of the beneficiaries. Finally, the HYCET Trust qualifies as a “Grantor Trust” and thus any assets expected to appreciate in value can be sold to the Trust on an installment sale basis. The note the taxpayer receives results in an estate freeze, while the future appreciation remains outside of the taxable estate at death.