Irrevocable Trusts

In today’s digital age, many people have a library of digital assets that may include items such as books, music, and movies. One of the perceived benefits of owning these digital items is having a convenient way to access your favorite media indefinitely with just a few mouse clicks. However, is it as simple as it seems? How do you own what you cannot touch? And if you cannot handle it, how do you pass it on? For those who own digital assets such as digital movies, these questions are at the heart of a new and interesting paradigm.

Clients often naturally choose their children to be beneficiaries of their revocable living trusts. Many clients also wish to name one or more of their children as the trustee of that trust, but are not sure if that is allowed by the law. The short answer is yes, a beneficiary can also be a trustee of the same trust—but it may not always be wise, and certain guidelines must be followed.

When we think of estate planning, we often think about preparing our accounts and property to go to our loved ones in a tax-efficient way, protected from probate, disgruntled heirs, beneficiaries’ creditors, divorcing spouses, bankruptcy, and the poor spending habits of children or other beneficiaries. We rarely consider preparing for receiving an inheritance of our own.

With a push by the Democratic party to return federal estate taxes to their historic norms, taxpayers need to act now before Congress passes legislation that could adversely impact their estates. Currently, the federal estate and gift tax exemption is set at $11.58 million per taxpayer. Assets included in a decedent’s estate that exceed the decedent’s remaining exemption available at death are taxed at a federal rate of 40 percent (with some states adding an additional state estate tax). However, each asset included in the decedent’s estate receives an income tax basis adjustment so that the asset’s basis equals its fair market value on the date of the decedent's death.
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Considering the myriad of trusts available, creating the right estate plan can seem daunting.  However, that is what we, as estate planning attorneys, do every day. We know the laws and will design a plan which addresses your specific situation. 

Here is a look at the basics of ten common trusts to provide you with a general understanding of the options available. There will not be a quiz at the end.
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A properly funded trust allows you to avoid probate, minimize taxes, provides organization, maintains control, and provides for yourself and your heirs. In its most simple terms, a trust is a book of instructions wherein you tell your trusted people what to do, when.

While there are many types of trusts, the major distinction between trusts is whether they are revocable or irrevocable. Let us take a look at both so you will have the information you need:

Revocable Trust. A revocable trust is also known as a “living trust” because it can benefit you during your lifetime and you can change or cancel it if your circumstances or goals change.
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Setting money aside for your children’s or grandchildren’s education is a great way to provide for their future. However, it is possible that not all of the money you have set aside will be used for college expenses. For example, your child may receive a large scholarship and will not need to use all the money you have saved, or your grandchild may choose a trade school that is less costly than you expected. Alternatively, your child or grandchild may decide to join the workforce immediately upon graduation. When confronted with this scenario, you may wonder what you can do with the excess money.
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It’s counterintuitive, we know: irrevocable trusts are revocable (and amendable). Unfortunately, irrevocability is a malicious myth. The uninformed could spend years relying on an old, out-of-date trust that could be updated and improved without too much effort. Yes, the so-called “irrevocable trusts” absolutely can be, and, often, should be, modified. 

In this issue, we’ll identify:

• 10 reasons you may want to modify your irrevocable trust
• 5 ways to modify your irrevocable trust
• 3 circumstances when trust modification should be considered
• When to contact our office to have your trust reviewed for potential modification

Estate planning has truly evolved over the past 20 years. Gone is the uncertainty about federal estate taxes and the absolute requirement for married couples to use complex trusts to minimize these taxes. But also gone is planning for the “traditional” family.

Trusts  allow you to avoid probate, minimize taxes, provide organization, maintain control, and provide for yourself and your heirs. In its most simple terms, a trust is a book of instructions wherein you tell your people what to do, when.

While there are many types of trusts, the major distinction between trusts is whether they are revocable or irrevocable. Let’s take a look at both so you’ll have the information you need:

Revocable Trusts. Revocable trusts are also known as “living trusts” because they benefit you during your lifetime and you can alter, change, modify, or revoke them if your circumstances or goals change.
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We all need a “do over” from time to time. Life changes, the law changes, and professionals learn to do things in better ways. Change is a fact of life - and the law. Unfortunately, many folks think they’re stuck with an irrevocable trust. After all, if the trust can be revoked, why call it “irrevocable”? Good question.
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