Irrevocable Living Trusts
Irrevocable living trusts are "irrevocable" in the sense that they cannot be revoked or undone. For federal tax purposes, assets within irrevocable trusts are not included in the settlor's ("trust maker's") gross estate. This is essentially because the settlor no longer has the ability to remove those assets from the trust and return them to their personal possession.
Irrevocable living trusts are sometimes called "inter vivos trusts" because they are made during the settlor's lifetime. They are helpful in estate planning because they do not go through probate. Probate is the court process by which a will is proven valid in court. Irrevocable living trusts are an alternative to wills, so they bypass the probate process. Therefore, using an irrevocable living trust can drastically reduce or even completely avoid probate costs. Probate and estate administration can eat up to 25% of an estate in some cases - that's money and assets that loved ones won't get. Irrevocable living trusts are also used for asset protection purposes. If someone loses a lawsuit, and most of their assets were transferred to an irrevocable living trust (not in anticipation of losing the lawsuit!), those assets are protected from the judgment creditor.
There are companies out there that offer quick, cheap trusts. They market to people who are looking for a deal, and they provide terrible products that have not been drafted by attorneys licensed within their customers' jurisdictions. As you can guess from above, most people don't even need trusts as a part of their estate plans. At Barber Power Law Group, our experienced estate planning attorneys create a unique estate plan for every single client that comes through our door. We draft each estate planning document, including trusts, by hand to ensure that our clients' objectives are accomplished. We seek to maximize our clients' legacy while minimizing taxes on their estates.
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