By Robert Kulas Robert Kulas
Level: Basic
Our firm is dedicated to providing you with quality estate planning resources, so you can become familiar with all of the existing options. When you …
The revocable living trust has become an indispensable estate planning tool in recent years. It gives you the ability to avoid probate, plan for disability, and keep your personal affairs private, while at the same time offering you the flexibility to remain in full control of your assets. And, for basic estate planning purposes, a revocable living trust is an effective tool.
The Irrevocable Trust
But there’s another kind of trust that’s used for purposes that a revocable living trust just can’t accomplish. What’s an irrevocable trust? It’s a trust that, once it’s established, generally can’t be changed or canceled. So, once you establish an irrevocable trust and transfer property to the trustee, the trustee manages the property according to the terms you’ve established; but, you can’t change the terms of the trust or take your property back.
Benefits
What an irrevocable trust lacks in flexibility, it makes up for in estate tax planning and asset protection power. Since you give up the ability to exercise day-to-day control over the trust property (even though you still might benefit from the property), the law doesn’t count the property as yours when it comes to taxes or creditors’ claims.
Example: Irrevocable Life Insurance Trust
For example, when you establish an Irrevocable Life Insurance Trust to hold your life insurance policy, the value of that policy is no longer included in the gross value of your estate for tax purposes. Why? When you establish the trust, you name a trustee, identify one or more beneficiaries, and instruct the trustee as to how to distribute your life insurance proceeds to your beneficiaries.
Once the life insurance policy is placed in the trust, it’s no longer under your ownership or control. So, it’s not counted as one of your assets when the time comes to pay estate taxes. The end result? Your beneficiaries still get their insurance proceeds, while your estate tax bill is reduced.
There’s a wide variety of irrevocable trusts, each with its own estate planning purpose. Your attorney can help you determine whether an irrevocable trust is appropriate for you.
Robert J. Kulas, P.A. is a leading provider of expert estate and financial planning in Port St. Lucie, FL. Our firm is dedicated to providing you with quality estate planning resources, so you can become familiar with all of the existing options.Through the use of Living Trusts, Wills (simple & complex), Powers of Attorney, Living Wills, Irrevocable Trusts, Family Limited Partnerships, and Charitable Gifting Strategies, our firm helps families preserve their wealth for future generations, minimize estate taxes, and avoid the expense and nightmare of probate.
For more information on irrevocable trust and other estate planning services, visit our website.
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This article has been viewed 29 time(s).Article Submitted On: December 27, 2010
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