You can’t amend it, modify it, change it or revoke it. The written terms of an irrevocable trust are much like the iron-clad sides of ship, strong and impenetrable, except in some rare circumstances. Not to be altered for any reason and managed by a trustee, when you place assets in an irrevocable trust, you essentially no longer own them. With all that said, for certain individuals, there are some distinct advantages to having an irrevocable trust.
Number one. It can protect your assets from “circling sharks.” You can’t take assets back after you transfer ownership into an irrevocable trust, so it’s safe from creditors or anyone who sues you and wins a monetary judgement. Basically, it preserves your assets for your beneficiaries and as an added plus, it also avoids probate. That’s because the extent of your holdings do not become a matter of public record, as it would if you bequeathed your assets in a last will and testament.
Number two. Because you no longer own the assets, the value (for the most part) is not subject to estate taxes. This can be a huge advantage if you have a very large estate. One exception involves the transfer of ownership of a life insurance policy to your trust. If you pass away within 3 years, the IRS can claim a share. To avoid this scenario, your trust can purchase (not transfer) any life insurance you wish to include for your heirs. You can still fund the premiums by making payments to the trust.
Number three. By transferring assets into an irrevocable trust, you may become eligible for government programs that might otherwise turn you down for exceeding income and asset limitations. As an example, you might be able to avoid “spending down” or giving away assets to qualify for Medicare to fund long-term care. If this is of concern to you, remember government rules are complex and often changing. Speak to an attorney to make sure an irrevocable trust is right for you.
In any case, Pierro, Connor & Strauss, LLC is available to help you make the right choice for your particular circumstances. Call our offices to schedule a time to meet. We can be reached in our Capital Region office at (518) 459-2100 or our New York City office at (212) 661-2480 or click to Schedule a Free Consultation Today!