Is irrevocable trust right for us?
Trusts come in two styles Each can be used to achieve financial goals.
A trust can be revocable or irrevocable. The authority to take back out of the trust assets you've put into trust ownership makes a trust irrevocable. Irrevocable trusts come in many different approaches. Each is designed to achieve a goal, either tax or non-tax goal. Some trusts seeks to have both types of goals. While a revocable trust is the more common, irrevocable trusts have their place and value as well. Taxes and Irrevocable TrustsESTATE TAX: An irrevocable trust (IT) can save some people estate tax. This tax affects MA residents with estates over $1 million and US citizens or residents. Trust keep the ownership of the asset out of the name of the person you want to enjoy that money or asset. Because that person does not become the owner the trust and tax law accepts that fact. Generally, the tax benefits are available to married couples, or those with a long-standing relationship. The Living Trust would include providing a sub-trust for the benefit of the surviving spouse or partner. This sub-trust could provide income and principal to the survivor with wide discretion. The sub-trust is written to be excluded from the survivor's gross taxable estate. This exclusion of the sub-trust in the second estate would lower the survivor's estate tax, as the tax authority calculates this tax as a percentage of the total estate value. In short, the survivor gets the benefit of the sub-trust but the assets are NOT in the estate of the survivor. RETURN to Estate Planning Services page |
Non tax benefits of irrevocable trust
The Irrevocable Trust gives benefits apart from the above tax approach. It can accomplish these goals: Keep money out of the hands of underage or beneficiaries with issues (addiction, etc.)
Avoids the probate of a will
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