Another type of trust to consider are Irrevocable Trusts. They are an essential part of estate planning, asset protection, and tax avoidance planning.
An irrevocable trust is a trust created by the grantor making it impossible to “revoke” the trust and bring the assets back into his or her name. At its most basic level an irrevocable trust if properly drafted, a person can give assets to an irrevocable trust and future creditors cannot take that asset. The grantor no longer owns the asset, the trust owns the asset, therefore providing shelter from the grantor’s and the beneficiary’s divorce, creditors and legal problems. The trust helps keep assets in the family and can last forever.
Below are a few types of Irrevocable Trusts the firm often utilizes to best fit the client’s needs:
Irrevocable Life Insurance Trusts (ILIT)
When you die, your estate becomes taxable in the eyes of the government, traditionally a life insurance policy will pay out to your taxable estate, therefore increasing the size of the estate and possibly requiring taxes to be paid on it. In the event of death your loved ones maybe responsible to pay these increased estate taxes
In many situations creating an Irrevocable Life Insurance Trust is your greatest benefit. the death benefits can be controlled by a trustee and given out based on age, need or meeting some other qualifications.
An ILIT is also beneficial for tax purposes. Allowing a settlor to keep life insurance proceeds outside his or her estate. An ILIT provides income tax protection for your family and loved ones, it is an important tax planning strategy for many comprehensive trusts.
Is a type of trust designed to last forever, sheltering assets from generation to generation from divorce, law suits and various taxes, typically these trusts are used by clients who wish assets to remain within and benefit only their descendants.
Spousal Lifetime Access Trust (SLAT)
A SLAT is an irrevocable trust used typically by married couples to provide asset protection and tax planning for a spouse and descendants.