An irrevocable trust stems from the fact that whatever contents it possess cannot be altered or changed by whoever formally made it. That said, an irrevocable trust is one that its contents, provisions, terms and conditions cannot be edited, changed, revoked and no modifications of any sort can be carried out on the trust by the grantor of the trust without the express permission of whosoever is to benefit from it. This is due to the fact that whatever ownership rights owned by the grantor before the assets were transferred into the trust becomes null and void.
Creating An Irrevocable Trust
Since an irrevocable trust is one whereby the terms and conditions of the trust agreement cannot be changed, modified or revoked without the express consent of the trustee and the beneficiaries of the trust, it is pertinent that the grantor knows what he/she is going into before entering into an irrevocable trust agreement.
To begin creating an irrevocable trust, the services of a well-qualified Irrevocable Trust Attorney Los Angeles, Woodland Hills, Encino, Tarzana, Chatsworth and the Entire San Fernando Valley should be sought since creating one yourself could be risky as modifications cannot be made to the agreement once it has been made. This could save you the risk of getting into future problems due to mistakes you might have made while creating the trust agreement.
The next step is to decide which of your assets you would want to be placed in the trust. At this stage, a careful well discussed and well thought out decision is the best since as you know, modifications cannot be made to an irrevocable trust.
Make decisions on who you would place in charge of the trust to act as the trustee and it is pertinent that whoever it is should be someone you trust and you can bank on to be dependable and honest.
Decide which individuals or family members would be beneficiaries of the trust, and how the income proceeds on the trust would be disbursed over a set period of time so that it can be of benefit to certain members of your family e.g. your grandchild.
Benefits Of An Irrevocable Trust
Making an irrevocable trust, although it tends to sound scary or rather quite limited, can prove to be quite beneficial as well to the grantor according to Irrevocable Trust Attorney Los Angeles, Woodland Hills, Encino, Tarzana, Chatsworth and the Entire San Fernando Valley. Some of the benefits from making an irrevocable trust are spelt out herewith.
Types Of Irrevocable Trust
- Making an irrevocable trust helps to reduce the taxes that accrue from estate holdings since these estates can no longer be said to be owned by the grantor.
- An irrevocable trust helps to control how assets or incomes placed in the trust will be used upon the death of the grantor.
- With an irrevocable trust in place, assets, cash or incomes placed in the trust can be used to settle expenses such as burial or funeral expenses.
- An irrevocable trust can be used to supplement and provide financial assistance or support to whoever is named as the beneficiary of the trust and at the same time, also control how the finance is used. It is also used to help minimize the spendthrift nature of the individual benefitting from the trust as you can decide how the income proceeds from the assets would be disbursed.
- Capital gains taxes or any income taxes on the grantor is eliminated when some assets owned by the grantor are placed in an irrevocable trust due to the fact that whatever assets owned by the grantor and now placed into the trust are no longer his and so any taxes on them cannot be collected.
- With an irrevocable trust in place, the probate process that is usually carried out upon the death of the grantor to determine the validity of his will or the sharing ratio of his will according to the extant laws of intestacy if the grantor died intestate is avoided on any assets or funds placed in the trust
- Creating and placing assets in an irrevocable trust helps keep these assets from divorce filing, other lawsuits and any creditors that may want to claim them as payment for the debts being owed them by the grantor.
From my years of practice as an Irrevocable Trust Attorney Los Angeles, Woodland Hills, Encino, Tarzana, Chatsworth and the Entire San Fernando Valley;
in estate planning, there are some commonly used types of irrevocable trust. Some of these include:
For all your irrevocable trust related matters, the Leventhal Law Group, P.C offers free and no obligation consultation with a qualified attorney. Call 818-347-5800 for a free consultation today!
- Charitable Remainder Trust: Here, the grantor of the trust puts assets into the trust in the name of a charity while naming someone to benefit from the income proceeds being generated from the trust for a period of time and then gives room for the charity to be the final beneficiary of the trust.
- Qualified Personal Residence Trust: This type of trust is one which is usually used by the grantor to enable him minimize taxes collected on his estate.
- Charitable Lead Trust: Under the charitable lead trust, assets are put in a trust in the name of a charity and the income proceeds from the trust are collected by the charity for a set period of time while someone else stands to be the final beneficiary of the trust.
- Irrevocable Life Insurance Trust: The Irrevocable life insurance trust is used by the grantor to own life insurance so as to shield it from the estate taxes that could be due to it after his demise. With this kind of trust in place, no taxes can be collected from the proceeds accruing from the life insurance policy entered into by the grantor.
- Special Needs Trust: The special needs trust is put in place by the grantor to help provide financial support for an intended beneficiary with special needs without actually affecting his or her ability to participate in any government benefits. Under the terms guiding the trust, the trustee is allowed to purchase things for the beneficiary with the income proceeds of the trust but as the beneficiary does not own the trust, it then cannot affect his ability to benefit from the government as the trust granted him by the grantor cannot be said to be an asset.
- Pooled Income Trust: In a pooled income trust, the grantor comes together with other trust makers and pools money together into a trust and for a set period of time, income is received from the trust and then the final beneficiary takes over. Usually, the trustee for this type of trust is a charity and the final beneficiary equally is the charity.