Perhaps you are nearing retirement closing out a successful career, and you might be thinking about estate planning tools, especially trusts.
There are various kinds of trusts suited to individual needs. For example, you may find that an irrevocable trust is a perfect fit for your particular circumstances.
About the irrevocable trust
Unlike a revocable trust, which you can rewrite as often as you like, you relinquish control over the assets when you establish an irrevocable trust. You can transfer ownership of investment accounts, bank accounts and real property including your own residence to the trust. At the time you set it up, you can provide instructions as to the distribution of the assets, but you must appoint a trustee to take on management responsibilities.
Often a grantor establishes an irrevocable trust for the purpose of Medicaid planning. Other reasons include protecting assets from professional liability or ensuring that a disabled loved one will receive continued support.
The estate tax exemption
Tax advantages and trusts often go hand in hand, especially for the wealthy. There is an increase in the federal tax exemption for 2021. For very well-off individuals who die in 2021, the exemption amount is $11.7 million. So, if the value of your estate is less than that, it will not be subject to federal estate tax.
A look ahead
There are various other tax exemptions that might come into play such as the veterans tax exemption and senior citizen tax exemption. Moreover, with the appropriate legal guidance, the grantor who establishes an irrevocable trust may retain certain powers during his or her lifetime adding flexibility to an already effective estate planning tool. To learn more about irrevocable trusts, view the video at https://www.youtube.com/watch?v=nYzLRFBs9wg.