Beyond Basics: The Irrevocable Trust

By:


The revocable living trust has become an indispensible 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 theres another kind of trust thats used for purposes that a revocable living trust just cant accomplish. Whats an irrevocable trust? Its a trust that, once its established, generally cant 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 youve established; but, you cant 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 doesnt 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, its no longer under your ownership or control. So, its 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.

Theres 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.

About the Author:

Robert J. Kulas, P.A. is a leading provider of expert estate and financial planning in Port St. Lucie, FL. For more information on irrevocable trust, visit our website.



Article Originally Published On: http://www.articlesnatch.com


Tags: , , , ,

|

Loading...
Related....
Videos...

Recent Legal Articles

Comments

Still can't find what you are looking for? Search for it!

Loading

Site Navigation:

Copyright 2005-2011 ArticleSnatch, LLC - All Rights Reserved.
Privacy Policy | Terms of Service.