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Irrevocable Trusts

Grand Junction Estate Planning Attorney

An Irrevocable Trust is similar to a Living Revocable Trust in both content and form with one major difference - an Irrevocable Trust may not be amended or revoked without a court order.

There is no restriction on the type of assets that are transferred to an Irrevocable Trust. However, often the Grantor will fund the Trust with life insurance since the death benefit passes to the beneficiaries tax free and can be used to pay estate expenses, including any federal estate tax that is owed. Trusts funded with life insurance are commonly called ILITs.

As a general rule, Irrevocable Trusts are not subject to modification or amendment. However, a Court may order an amendment to correct a mistake or a drafting error. Additionally, the Court can order an amendment, if changes in the tax code will frustrate the original intent of the Grantor.

Irrevocable Trust Benefits

Generally speaking the most common reason to create an Irrevocable Trust is to reduce the size of the Grantor's estate. This is accomplished by making annual gifts to the Trust, using the Grantor's annual gift exemption of $14,000 per recipient and/or part of the Grantors life time gift exemption. While it may be necessary - depending upon the size of the gift - for the Grantor to file a gift tax return, no gift tax is owed unless the value of the gifts exceeds the Grantor's lifetime gift exemption.

A second advantage is that the income generated by the Irrevocable Trust is taxed at the tax rate of the beneficiaries if the beneficiaries are adults. Otherwise, the tax is based on the tax rate of the Grantor.

A third advantage is that the Irrevocable Trust assets will not be included in the Settlor's probate estate.

A fourth advantage is that Trust assets can not be seized or attached by creditors of the beneficiaries.

The issues and details involved in drafting an Irrevocable Trust are highly complex and subject to IRS scrutiny. Thus, the Trust should be drafted by an estate planning attorney who is experienced in the creation and funding of this type of Trust.

Estate Planning Lawyer in Grand Junction

Since 1993, the Law Offices of James A. Littlepage , a Grand Junction Estate Planning firm, has been helping families create Irrevocable Trusts. Mr. Littlepage has prepared over 2,000 estate plans and recently was recognized with a 2015 and 2016 Five Star Estate Planning Attorney℠ award. In 2014, 2013, 2012, 2011 and 2010 he received the Five Star Wealth Manager℠ award, as seen in 5280 and ColoradoBiz magazines. For assistance in drafting an Irrevocable Trust that is tailored to the needs of your family, please contact our Grand Junction office for a complimentary 30 minute consultation for estate planning and probate.

Contact a Grand Junction estate planning attorney at the firm to discuss Irrevocable Trusts.