A living trust is a document that serves to pass assets onto others. Often, a living trust is created as a will substitute.
A living trust is created when a person, called the grantor, assigns property to be managed by an individual known as the trustee. The assets in the trust will pass to the benefit when a specific event occurs—for example, upon the death of the grantor.
An irrevocable living trust cannot be changed after it has been signed by the grantor. Unlike a revocable living trust, an irrevocable trust has the benefit of avoiding probate and estate taxes because transfer of the property happens during the grantor’s life.
- Carefully consider the beneficiaries of the trust and make sure to include backup beneficiaries.
- Make sure to include instructions for when the beneficiaries die prior to the transfer of the property; otherwise the property goes back to the grantor and distribution will be based on his will.
- The terms of the trust should mention where the trust assets will go after the beneficiaries die.
- A pourover will might be a good companion to the living trust because it will dictate what happens to any property not within the living trust.
- Although an irrevocable living trust allows for the avoidance of estate and probate taxes, there might be gift tax consequences when creating the trust.
Seeking Legal Help
An irrevocable trust can include assets such as life insurance policies, money, property, businesses, and investments.
If you are interested in setting up an irrevocable living trust or want to know if this type of trust may be right for you, it is best to get in touch with an experienced estate lawyer who can provide further guidance.