What is an Irrevocable Trust?

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					What is an Irrevocable Trust?

An irrevocable trust is one that’s created so that, once it is signed, it’s permanent
- it can’t be changed or done away with.

Why Use an Irrevocable Trust?

The fact that an irrevocable trust can’t be changed or revoked once it’s created
makes it inflexible. There are also revocable trusts available – those that can be
changed or cancelled at any time during the trust maker’s lifetime. So, why would
someone opt for an irrevocable trust?

Once you transfer property into an irrevocable trust, you no longer own or control
the property. This fact means that a variety of asset protection and tax savings
options become available to you. With a revocable trust, on the other hand, your
property remains under your control, so it’s not shielded from creditors or from
estate taxes.

Examples of Irrevocable Trusts

Here are a few examples of irrevocable trusts:

    Irrevocable Life Insurance Trust: This is a type of trust that is used to reduce
     your estate tax bill. Once the trust is established, ownership of your life
     insurance policy is transferred to the trustee. The trust is named
     beneficiary of your policy. Your spouse and children (or other loved ones)
     are in turn named beneficiaries of the trust itself. Since you no longer have
     ownership or control of the policy, it’s removed from your taxable estate,
     and your overall estate tax bill is reduced.
    Qualified Personal Residence Trust: This is a type of trust that, when
     properly established, can reduce both your estate tax bill and the amount
     of gift taxes you pay. You establish the trust, usually naming your children
     as beneficiaries, and transfer your residence to the trustee. Part of
     establishing the trust involves designating a period of time during which
     you’ll continue to reside in the home, after which the trustee will transfer
     the home to your beneficiaries. Since your beneficiaries have to wait to
  receive your home, the value of this gift to them is reduced, also reducing
  the amount of the gift taxes you’ll pay. Plus, assuming you’re still alive
  when the house is transferred to your beneficiaries, it is no longer part of
  your taxable estate. So, your estate tax bill is minimized.
 Charitable Remainder Trust: With a Charitable Remainder Trust, you
  establish an irrevocable trust, transfer assets to the trustee and name one
  or more beneficiaries who will receive payments from the trust for a certain
  period of time. Once this period of time is over, the trust assets are
  transferred to a charity chosen by you. A Charitable Remainder Trust
  allows you to reduce the amount of estate tax you’ll pay, and it provides for
  income tax savings.

These are just a few examples of irrevocable trusts and the benefits they can
provide. An estate planning attorney can give you more information about
how an irrevocable trust might fit into your overall estate plan.

Experienced estate planning attorneys Worcester MA of the Law Offices of
James A. Miller estate planning and business planning resources to residents of
Worcester MA. To learn more about these free resources, please visit
www.mamedicaid.com today.

				
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Description: An irrevocable trust is one that’s created so that, once it is signed, it’s permanent - it can’t be changed or done away with.