When meeting with prospective clients who are interested in creating a comprehensive estate plan, we frequently discuss using an irrevocable trust. Initially, people often wonder about the value of using irrevocable trusts. Key benefits of using irrevocable trust are:
- Asset protection from future creditors of beneficiaries
- Preservation of step-up of basis upon death of the grantor
- Ability to select whether the grantor or the beneficiaries of the trust will be taxable as to trust income
- Ability to design who will receive the net distributable income generated in the trust
- Ability to make assets in the trust non-countable in regard to the beneficiaries’ eligibility for means-based governmental benefits, such as Medicaid and Supplemental Security Income (SSI)
- Ability to specify certain terms and incentives for beneficiaries’ use of trust assets
- Ability to decide (through the grantor’s other estate planning documents) which beneficiaries will receive what share, if any, of remaining trust assets after the grantor dies
- Ability to determine who will receive any trust assets after the deaths of the initial beneficiaries
Thoughtful planning and careful drafting is necessary to take advantage of the benefits available and therefore, it is important to speak with an estate planning attorney to understand how and why each benefit comes about. If you or someone you know are interested in learning more, please contact our firm.
