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Irrevocable Trust

Establishing a Trust in Pittsburgh, PA

At face value, irrevocable trusts seem like the least desirable option when deciding what to do with one's estate. However, the advantages of establishing an irrevocable trust outweigh the costs of probate for many Americans every year. With an irrevocable trust, the owner of the estate cannot modify or terminate the trust without the permission of his or her named beneficiaries. While this seems like it would be completely undesirable, it comes with the benefit of significant reductions in estate and tax liability for the grantor. Because it effectively removes legal ownership of the estate from the creator of the trust, irrevocable trusts reduce the individual's taxable estate by however much is included in the trust.

Many life insurance holders fail to realize that the proceeds from their life insurance policy are included in their estate for tax purposes. This means that the proceeds from the policy may be taxed at the time of the policy owner's death if they are a part of the taxable estate. This is another reason that many choose irrevocable insurance trusts. Because this type of trust relieves the grantor of the ownership title of the estate, everything in that estate, including their life insurance proceeds, is protected from the IRS. Establishing an irrevocable life insurance trust includes giving up one's incidents of ownership in his or her specific life insurance. Since the individual no longer owns the policies, they will not be taxed with the estate once they die.

Upon the death of the insurance holder, the proceeds from his or her policy will be added to the state and given to the beneficiaries of their trust in the full, untaxed amount. Another benefit of an irrevocable trust is that, because they are given to the beneficiary of the estate holder through the trust and not directly to the person from the insurance company, the proceeds cannot be taxed on the estate of the spouse or child receiving the proceeds either.

Types of Irrevocable Trusts

Within the sphere of irrevocable trusts, there are options regarding how you can set up your financial plan. All of the different irrevocable trusts typically reduce taxes, which is why grantors may choose to use this estate planning method rather than create a will or design a revocable trust.

Bypass trusts are used by spouses and they can reduce estate taxes on a property when the second spouse dies. In bypass trusts the bulk of a person's property goes into the trust when he or she dies. Then, the surviving spouse can use the trust property but will never own it. Once the surviving spouse has also passed away, the bypass trust will not be included in his or her estate, which will save money in taxes.

Another type of irrevocable trust is called a QTIP trust. This is one that is used by couples who want to postpone the payment of estate taxes until the second spouse passes away. In addition, QDOT trusts can be used for this purpose, but are chosen when one spouse is not a United States citizen.

As well, you can choose a generation-skipping trust, which is an irrevocable trust that will skip the children and instead name the grantor's grandchildren as beneficiaries. Normally in these trusts the grandchildren become income beneficiaries but never own the property.

In addition, life insurance trusts are created to reduce estate taxes because they strip the proceeds of life insurance from the taxable estate. Instead, the trust will own the life insurance policy and the beneficiary can be anyone that the grantor desires. The grantor is required to set up this trust at least three years before it is activated and must declare a trustee other than himself or herself. The last type of irrevocable trust that you can create is a Grantor-Retained Trust which removes property from a taxable estate.

Irrevocable Charitable Trusts

As well, there are irrevocable trusts that are set up to be charitable trusts. These are designed to reduce some of the income and estate taxes on a property because the proceeds of the trust are going to be given to charity. Within the sphere of charitable, irrevocable trusts, there are three different options you can take. If you desire, you can create a pooled income trust which will entail putting your money together with other trust makers to receive trust income for a set time.

The charity is always the trustee in these situations and is also the financial beneficiary upon the grantor's death. There are also charitable lead trusts, which are trusts where the charity named will receive income from investments. In these trusts, someone else is considered the final beneficiary. There are also charitable remainder trusts, which are trusts where the charity is listed as the final beneficiary but another party is given permission to recover the income that is generated.

Estate Planning Lawyer Overseeing Your Trust

Because this subject can be difficult for you and your family to discuss, we are offering our firm as a means of legal counsel on the subject of irrevocable trusts. At the Frayer Law Offices, we can lay the options out clearly and concisely for you when it comes to your estate so that you can make the right choice for yourself. Our estate planning attorney in Pittsburg has been trained to put our clients' needs above all else.

Whether you are you considering your options or if you have already decided that an irrevocable trust is the best option for you, the Pittsburg estate planning attorney at the Frayer Law Office offer service to you. We understand that each of our clients come with unique situations. That is why we have made client satisfaction our number one priority. No matter how big or small your estate is our firm's estate planning attorney wants to be your advocate and your representative.

Regardless of your situation, we want to offer our experienced and dependable service to your needs when it comes to an irrevocable trust. We sincerely care about the future of your business and estate and we want to be the ones to protect your best interest. Our years of service and success serve to illustrate our ability to facilitate positive outcomes for our clients. If you are wondering whether an irrevocable trust is the best option for your family and your estate, call our office today to learn more about how we can be your partner.

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The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.