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IRREVOCABLE TRUST

An Irrevocable Trust cannot be altered amended or terminated by the person creating it. Once the assets are transferred into the Trust without retention of any kind of power over the assets, the person creating the Trust can no longer regain ownership of that asset. However, it provides certain benefits that a Revocable Trust cannot. They can be used for estate and tax considerations. The benefit of this type of trust for estate assets is that it removes all incidents of ownership.  It can be used in conjunction with qualifying for Medicaid.  Irrevocable trusts can also be useful to individuals who work in professions that may make them vulnerable to lawsuits, such as doctors or attorneys. Once property is transferred to such an Irrevocable Trust, it is owned by the trust for the benefit of the named beneficiaries. Therefore, it is safe from legal judgments and creditors, as the trust will not be a party to any lawsuit. 

The collective assets comprise the trust fund, which may consist of the following:

  • Real Estate

  • Bank Accounts (checking, savings, money market, certificates of deposit)

  • Investment and retirement accounts

  • Automobiles

  •  Boats

  •  RVs

  • Motorcycles

  • Timeshares

  • Life insurance

Types of Irrevocable trusts:

Irrevocable trusts can have many applications in planning for the preservation and distribution of an estate, including:

  • To deplete one’s property to ensure eligibility for government benefits, such as Social Security income and Medicaid (for nursing home care). Such trusts can also be used to help secure benefits and care for a special needs child by preventing disqualification of eligibility.

  • To take advantage of the estate tax exemption and remove taxable assets from the estate. Property transferred to an Irrevocable Trust does not count toward the gross value of an estate. Such trusts can be especially helpful in reducing the tax liability of very large estates.

  • To prevent beneficiaries from misusing assets, as the grantor can set conditions for distribution.

  • To gift assets the estate while still retaining the income from the assets.

  • To remove appreciable assets from the estate while still providing beneficiaries with a step-up basis in valuing the assets for tax purposes.

  • To gift a principal residence to children under more favorable tax rules.

  • To house a life insurance policy that would effectively remove the death proceeds from the estate.

Today’s Irrevocable Trusts come with many provisions that were not commonly found in older versions of these instruments. These additions allow for much greater flexibility in trust management and distribution of assets. Provisions such as decanting, which allows an existing trust to be moved into a newer trust that has more modern or advantageous provisions can ensure that the trust assets will be protected and managed effectively now and in the future. Other features that allow the trust to change its state of domicile can provide additional benefits.

IRREVOCABLE TRUST

An Irrevocable Trust cannot be altered amended or terminated by the person creating it. Once the assets are transferred into the Trust without retention of any kind of power over the assets, the person creating the Trust can no longer regain ownership of that asset. However, it provides certain benefits that a Revocable Trust cannot. They can be used for estate and tax considerations. The benefit of this type of trust for estate assets is that it removes all incidents of ownership.  It can be used in conjunction with qualifying for Medicaid.  Irrevocable trusts can also be useful to individuals who work in professions that may make them vulnerable to lawsuits, such as doctors or attorneys. Once property is transferred to such an Irrevocable Trust, it is owned by the trust for the benefit of the named beneficiaries. Therefore, it is safe from legal judgments and creditors, as the trust will not be a party to any lawsuit. 

The collective assets comprise the trust fund, which may consist of the following:

  • Real Estate

  • Bank Accounts (checking, savings, money market, certificates of deposit)

  • Investment and retirement accounts

  • Automobiles

  •  Boats

  •  RVs

  • Motorcycles

  • Timeshares

  • Life insurance

Types of Irrevocable trusts:

Irrevocable trusts can have many applications in planning for the preservation and distribution of an estate, including:

  • To deplete one’s property to ensure eligibility for government benefits, such as Social Security income and Medicaid (for nursing home care). Such trusts can also be used to help secure benefits and care for a special needs child by preventing disqualification of eligibility.

  • To take advantage of the estate tax exemption and remove taxable assets from the estate. Property transferred to an Irrevocable Trust does not count toward the gross value of an estate. Such trusts can be especially helpful in reducing the tax liability of very large estates.

  • To prevent beneficiaries from misusing assets, as the grantor can set conditions for distribution.

  • To gift assets the estate while still retaining the income from the assets.

  • To remove appreciable assets from the estate while still providing beneficiaries with a step-up basis in valuing the assets for tax purposes.

  • To gift a principal residence to children under more favorable tax rules.

  • To house a life insurance policy that would effectively remove the death proceeds from the estate.

Today’s Irrevocable Trusts come with many provisions that were not commonly found in older versions of these instruments. These additions allow for much greater flexibility in trust management and distribution of assets. Provisions such as decanting, which allows an existing trust to be moved into a newer trust that has more modern or advantageous provisions can ensure that the trust assets will be protected and managed effectively now and in the future. Other features that allow the trust to change its state of domicile can provide additional benefits.

The information on this website is provided for informational purposes only, and should not be construed as legal advice.

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“My husband passed away with no will. I really had no idea what I needed to do. Working with Mr. Stone and Nathan was so easy. They were quick to respond to my questions and concerns, and in a language I could understand. I would highly recommend them to anyone who has found themself in my position.”

Jan Youngblood

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Kristi Fothergill

“I moved to KY in 2017 from out of state, forced to embark on the process of restarting my life after experiencing several stressful life events in rapid succession. Not knowing anyone in Louisville, I relied on resources like Google to help me select various providers, including an estate planner. While I entered into many of these new arrangements with my eyes wide open, I was really taken by how easy it was to work with the Stone legal team. They provide a graceful mix of trustworthy competence and a quick compassionate grasp of the complexities of my particular situation. They listen and have worked effectively with me to achieve what appears to be an optimum solution for the successful execution of my future estate goals. I feel fortunate to have them as partners in my life.”

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