When planning to care for an elderly loved one, there are a lot of terms that get thrown around, and many that you may be unfamiliar with. One such term is “irrevocable trust.” Chances are that you at least have a basic of idea of what a trust in general is—something you set up in order to provide for those you love when you no longer are able to, or to keep your assets safe, right? An irrevocable trust is just as easy to understand.
An irrevocable trust is simply a trust that can’t be either changed or terminated without consent from the beneficiary. This is because when the person who grants the trust (the one who created it) moves assets into the trust, his or her rights of ownership to any assets in the trust and to the trust itself are then transferred to the beneficiary. Also, once an asset is placed in the trust, it is considered a gift to the trust and the grantor cannot get it back. They are, however, able to lay out the terms, rules and the uses of the assets in the trust, but only as long as they obtain the consent of both the trustee and beneficiary.
There are many different kinds of uses for an irrevocable trust when it comes to planning to preserve and distribute a person’s estate, and some of them include:
- Taking advantage of an estate tax exemption, as well as getting rid of any taxable assets the estate might have.
- Preventing the beneficiaries from misusing any assets placed in the trust, since the grantor is able to set conditions for the distribution of those assets.
- To gift the assets in the trust to the estate while also keeping any income from the assets.
- To get rid of any appreciable assets the estate may have while also allowing beneficiaries a way to value the assets for taxes.
- To give children the principal residence under tax rules that allow for more favorable conditions.
- To keep a life insurance policy that would get rid of any death proceeds from the estate.
If you or someone you love needs assistance with Elder Care law issues, call 856-281-3131. Let us help ease your stress and give you a plan.