Memphis Irrevocable Trusts Attorneys
Lawyers for Complex Estate Planning in Tennessee
The skilled lawyers at the offices of Douglass & Runger, Attorneys at Law, provide trusted guidance when you are deciding on the types of trusts that will be part of your estate plan. One type is known as an irrevocable trust, and there are many variations on this kind of trust. Our experienced attorneys will explain the different types of irrevocable trusts and help you decide on the right trust or trusts for your unique circumstances.
Important Information About Irrevocable Trusts
You might already be familiar with the idea of trust, but you might not be so sure about how a trust could benefit you and your family. A trust is a financial arrangement in which an individual—the “grantor”—can transfer their assets into the trust. The trust itself and the assets it contains are managed by a party called a “trustee.” When a trust is used for the purposes of estate planning, the trust documents will generally include instructions for transferring the trust’s assets to the grantor’s named beneficiaries upon the death of the grantor.
While the distribution of assets typically takes place after the grantor’s death, the terms of an irrevocable trust can become effective as soon as the trust is set up and funded. This means that the trust’s terms can apply during the grantor’s lifetime. Unlike a revocable living trust, which can be amended and revoked at any time by the grantor, an irrevocable trust’s terms cannot generally be revoked or changed once the trust agreement is executed.
Irrevocable trusts are used for varying purposes, including but not limited to:
- Reducing and/or eliminating estate tax obligations
- Securing assets from creditor claims
- Offering long-term or multi-generational financial security to beneficiaries
- Assisting beneficiaries who have special needs
Difference Between an Irrevocable Trust and Revocable Living Trust (Control vs. Protection)
When determining whether an Irrevocable Trust or Revocable Living Trust makes more sense for you or your loved ones it is important to understand the differences and benefits offered by both types of trusts. One of the biggest differences between an Irrevocable Trust and Revocable Living Trust is the Grantor’s Control and Protection over assets held in trust. Typically, in a Revocable Living Trust the Grantor has complete control over the trust agreement and the assets managed by the trust. However, due to the Grantor’s total control over the trust and the trust’s assets, there is less protection against creditors and court judgments. Conversely, in an Irrevocable Trust the Grantor is afforded more protection over the Grantor’s assets. The trade-off, however, is that in order to accomplish greater protection over the Grantor’s assets the Grantor must give up the level of control the Grantor has over the trust agreement and the management of the assets in trust.
Common Types of Irrevocable Trusts
There are a variety of different irrevocable trusts, and the right trust or trusts for your estate plan will depend on your specific goals. Here are just a few of the types of irrevocable trusts that we can help you with:
- Special needs trusts: Also called a supplemental needs trust, this type of trust provides financial support to beneficiaries with disabilities while maintaining their eligibility for government assistance programs.
- Credit shelter trusts: Credit shelter trusts are often used by married couples to avoid estate taxes on specific assets. Assets, including real estate, can be placed in the trust for a surviving spouse to use during their lifetime, with the goal of passing them to a final beneficiary upon the spouse’s death.
- Generation-skipping trusts: With this kind of trust, you can direct your assets to go to your grandchildren instead of your children so that your children can skip or bypass estate taxes. Generation-skipping trusts are subject to specific taxes and exemptions
- Irrevocable life insurance trusts (ILITs): An ILIT can be set up to hold a life insurance policy on the grantor and to receive death benefits upon the grantor’s death. The proceeds of the life insurance payout can then be used to offset estate taxes or to provide an additional inheritance to beneficiaries.
- Charitable trusts: You can establish a charitable trust to gain tax advantages while providing support to charities of your choosing. There are several sub-types of charitable trusts, and your attorney can help you understand the differences.
Asset protection trusts: Assets that are placed in irrevocable trusts are generally untouchable by creditors. Depending on your circumstances, an asset protection trust could help you leave more for your beneficiaries.
Call a Memphis Attorney for Guidance Today
If you have questions about special needs trusts, contact our office to get the answers. Call (901) 388-5805 to schedule an initial consultation at our office. We will work hard to ensure that your loved ones with special needs are properly cared for in your comprehensive estate plan.