Irrevocable Trust
IrTrust/">Revocable Trust
An irTrust/">Revocable Trust is a type of Trust that cannot be altered, amended, or revoked once it has been established. In this arrangement, the grantor (the person who creates the Trust) transfers Assets into the Trust, relinquishing control and ownership over those Assets. Because the grantor no longer owns the Assets, they are generally protected from Creditors and may have certain tax benefits.
Examples:
- Life Insurance Trust: An individual may create an irrevocable Life Insurance Trust (ILIT) to hold a Life Insurance policy, ensuring that the death benefit is not included in their taxable estate.
- Special Needs Trust: A parent may establish an irTrust/">Revocable Trust for a child with disabilities, allowing the child to receive benefits without jeopardizing eligibility for government assistance.
Cases:
- Estate Planning: A wealthy individual may use an irTrust/">Revocable Trust to remove Assets from their taxable estate, thereby reducing estate taxes upon death.
- Asset Protection: A business owner might set up an irTrust/">Revocable Trust to protect business Assets from potential lawsuits or Creditors.