Trust basics and why some trusts should be irrevocable

Maybe you first heard of a trust from watching public broadcasting funded by the trust of what sounds like a very rich family.

But trusts aren't just for the very wealthy. Almost everybody planning the future of their assets at least considers using a trust as tool to achieve their goals.

The word "trust" makes sense

In a trust, a person (the trustee) is entrusted to manage assets for the benefit of someone else (the beneficiary). The trust is granted, of course, by a grantor.

There are many reasons and ways to create trusts of various kinds. Let's focus on a couple common cases.

In a living trust, the grantor (frequently a parent) also acts as the trustee for the benefit of beneficiaries (usually their children). This way, the parent can leave assets while also, for example, minimizing probate delays after death.

The grantor/trustee can change the terms of most living trusts at any time and has a relatively free hand in making decisions. Such trusts are "revocable."

Why create an "irrevocable" trust?

In an irrevocable trust, the grantor (perhaps the parent) can't act as trustee and can no longer control the assets. Plus, the trust can't be changed once it's created.

Obviously, irrevocable trusts shouldn't be taken lightly. But they have major advantages that make them worth considering.

Although an irrevocable trust can't be changed, the grantor creates it, names the trustee and can retain the right to change the beneficiaries.

Assets are transferred to the trust, so the grantor's net worth may be greatly reduced, possibly making them eligible for Medicaid and free of creditors and alimony payments. This might also limit the taxes paid by heirs upon the grantor's death.

The legal and financial solutions offered by the very complex field of trusts and estate planning offer a wide range of opportunities.

No Comments

Leave a comment
Comment Information
FindLaw Network
EMAIL US FOR A RESPONSE

Let’s Talk.

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

An Elder Law And Estate Planning Law Firm On Your Side.

satellite offices

By Appointment Only

222 East Main Street
Ste 314
Smithtown, NY 11787

Phone: 631-894-4730
Fax: 631-979-9546
Smithtown Law Office Map

13 East Main Street
Bay Shore, NY 11706

Phone: 631-515-5978
Fax: 631-665-9262
Bay Shore Law Office Map

satellite offices
70 East Sunrise Highway
Ste 500
Valley Stream, NY 11581

Phone: 631-894-4730
Map & Directions

33 Flying Point Road
Suites 121/122
Southampton, NY 11968

Phone: 631-894-4730
Map & Directions