A trust is a financial arrangement that allows a grantor (the creator of the trust) to transfer assets to a trustee (the manager of the trust) to hold for beneficiaries (the receivers of the assets). An irrevocable trust is, quite simply, a trust that cannot be changed or revoked once it is created. If you create an irrevocable living trust and you later decide you would like make changes, you are not able to do it. If you created an irrevocable testamentary trust, your family cannot change the terms after your death.
What exactly is an irrevocable living trust? Rather than a legacy created after death, a living grantor creates and funds the trust. These trusts can benefit children, spouses, charities - anyone designated by the grantor. While life insurance benefits are subject to hefty taxes, an Irrevocable Life Insurance Trust transfers ownership of insurance policies to the trustee. This can avoid those taxes. Other irrevocable living trusts include several charitable trusts. Charitable Lead Trusts provide set payments to a charity. The payments end after a designated number of years. Then any money left goes to beneficiaries. Charitable Remainder Trusts work in the opposite manner. A charity receives a payment for a designated time period. What is left is then distributed to beneficiaries.
The second type of irrevocable trust is a Testamentary Trust. This trust is created according to instructions in the grantor's will. It can, also, benefit anyone designated by the instructions left by the grantor. A Testamentary Trust is irrevocable since the grantor, who could change a trust, has died.
Trusts are tools we can help you use to gain more control of your financial world. Contact us to learn more.