Irrevocable Trusts

Irrevocable Trusts

Irrevocable trusts are trusts that eliminate all the privileges of control and responsibility of the grantor (individual making the trust) over the trust and possessions within the trust. The trust is not able to be altered or modified by the grantor, just the beneficiaries of the trust. The advantages of an irrevocable trust are that it gives asset assurance and tax reductions. All holdings inside the trust are no longer a part of the grantor’s taxable estate.

There are numerous types of irrevocable trusts such as:

  • Trusts for Minors. An irrevocable trust might be created to accommodate the education and other life needs of minor kids. Irrevocable trusts for minors can determine when and how the assets of the trust could be appropriated. For instance, will the holdings be given at certain ages or during the span of the beneficiary’s lifetime.
  • Spendthrift Trusts. An irrevocable trust in which the holdings are recognized as assets of the beneficiaries for tax purposes.
  • Supplemental Needs Trusts. An irrevocable trust used when a beneficiary receives Medicaid, SSI, or other government aid programs. In spite of the fact that an outright gift may preclude a beneficiary from government help programs, this kind of trust is made so the stakes obtained by the beneficiary are not acknowledged for the purposes of confirming qualification in government aid programs.
  • Life Insurance Trusts (ILIT’s). An irrevocable trust that keeps the life insurance arrangements under the names of the beneficiaries so it will be excluded from estate taxes. The grantor determines the ages and stages for their kids to obtain the benefits of the life insurance policy. Because the life insurance policy belongs to the grantor’s children, when the premium is expected, the grantor gifts the total of the premium and places it in a trust account to be paid to the insurance agency.
  • Charitable Trusts. Irrevocable trusts made to benefit a charitable association today (charitable lead trust) or sometime later in the future (charitable remainder trust). The amount of the tribute gives the grantor a deduction of taxes.

Irrevocable trusts may be difficult and must be prepared with correct language to meet all requirements for certain tax breaks, that is the reason it is vital for a knowing and skilled lawyer to go over your individual estate planning needs and legitimately create estate planning documents that will help your family.

If you or a loved one are contemplating on drafting estate planning tools, for example an irrevocable trust, or you might like additional information, please contact Winston Law, P.A. at (561) 670-9375 or susan@winstonlawpa.com for your free consultation.