Legal Guidance On Irrevocable Trusts
Trusts can be valuable and beneficial tools for estate planning, asset protection and other reasons. The creator of a trust (usually called the trustor) places assets into a trust and then names a trustee to manage the trust for the benefit of the beneficiaries of the trust. Trusts can be revocable (these are living trusts) or irrevocable. The benefits of trusts can include:
- Minimizing costs and time in probate proceedings
- Peace of mind
- Preserving assets for future generations
- Estate tax benefits
- Asset protection
- Guidance in the event a trustor becomes incapacitated
- Providing for those with special needs (such as a disabled child)
The estate planning attorneys at Stephenson Fournier are experienced in creating, funding and administrating trusts to accommodate the needs of clients. If you are interested in learning more about trusts and other planning tools, please contact us to consult with a skilled Texas trusts lawyer.
What Kinds Of Irrevocable Trusts Are Available?
Our attorneys have experience with all forms of irrevocable trusts. A few examples are these:
An individual who owns a life insurance policy on their own life needs to be aware that at their death, proceeds from the policy will be included in their taxable estate unless they take action before death. Creating an irrevocable life insurance trust (ILIT) and transferring ownership of the policy to the trust can remove the life insurance proceeds from the estate, reducing the estate taxes.
A well-meaning parent of a special needs child (a disabled child (can inadvertently disqualify their child from receiving government benefits by accumulating savings in the wrong type of account or investment vehicle. A properly formed third-party special needs trust, also called a supplemental needs trust, allows a person to leave assets to a disabled beneficiary while preserving the public benefits available to that beneficiary and enhancing the quality of the beneficiary’s life.
A charitable remainder trust generally has two beneficiaries. In most cases, one of them is the person creating the trust (and possibly their spouse), and the other is a qualified charity or tax-exempt organization. During the trustor’s lifetime, he receives a set percentage of income from the charitable trust. Upon death, the charity receives whatever is left over.
Generation-skipping trusts, sometimes known as dynasty trusts, can be another effective planning tool. A generation-skipping trust is exactly what it sounds like — a trust in which a grantor’s assets are locked up in a trust to be transferred to the grantor’s grandchildren, while skipping the grantor’s children. They are sometimes used to reduce estate taxes while protecting assets from generation to generation as they appreciate in value.