Irrevocable Life Insurance Trust (ILIT)
Qualified Personal Residence Trust (QPRT)
Special Needs Trust
Charitable Remainder Trust
Grantor Retained Income Trusts
Irrevocable Trusts play an integral part in many estate plans, especially in taxable estates. Only an experienced estate planning attorney should assist in planning your estate and drafting any Irrevocable Trust. There are many factors in determining what type of Irrevocable Trust should be used in an estate. Estate, Gift, Income, and Generation Skipping Taxes play major roles in when planning with Irrevocable Trusts.
Revocable Trusts and Irrevocable Trusts have many similarities. Most revocable trusts convert into irrevocable trusts upon the death of the creator of the trust. Also, both types of trusts provide for the transfer of property to a trust which is administered by a trustee. Typically upon a death, the trustee distributes the property pursuant to the terms of the trust.
Besides the one obvious difference, one is revocable and the other is irrevocable, there are also essential distinctions between the two types of trusts. An irrevocable trust has more of an immediate consequence in terms of property rights, distribution and taxes. For example, a parent who transfers property to an irrevocable trust for the benefit of the children gives up many if not all rights to control the property. Whereas a revocable trust will provide the children with a future benefit in the trust property, usually, after the death of the parent. Irrevocable trusts involve major planning and drafting issues that do not commonly exist for revocable trusts.
Although, by design, an irrevocable trust cannot be amended, certain protections can be put in place to modify the trust.
Benefits of a Irrevocable Trust Include:
- Tax Advantages
- Estate Tax Reduction
- Asset Protection
- Charitable Planning
- Maximize Gifting Potential
- Gifting While Retaining Control
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