Irrevocable Trusts

Irrevocable Trusts

Irrevocable trusts are trusts that remove all the privileges of control and responsibility of the grantor (individual making the trust) over the trust and possessions inside the trust. The trust can’t be altered or changed 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 within the trust are no longer a part of the grantor’s taxable estate.

There are many kinds of irrevocable trusts such as:

  • Spendthrift Trusts. An irrevocable trust in which the holdings are seen as assets of the beneficiaries for tax purposes.
  • Trusts for Minors. An irrevocable trust may be created to accommodate the education and other life needs of minor kids. Irrevocable trusts for minor children can decided when and how the assets of the trust can be appropriated. For instance, will the holdings be given at certain ages or during the span of the beneficiary’s lifetime.
  • Life Insurance Trusts (ILIT’s). An irrevocable trust that holds the life insurance arrangements under the names of the beneficiaries so it will not be included in estate taxes. The grantor decides on the ages and stages for their kids to get 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.
  • Supplemental Needs Trusts. An irrevocable trust used when a beneficiary receives SSI, Medicaid, or other government aid programs. In light of the fact that an outright gift may prevent 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.
  • 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 complex and must be prepared with correct language to meet all requirements for certain tax breaks, that is the reason it is important for an experienced and skilled attorney to go over your individual estate planning needs and legitimately draft estate planning reports 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.