An irrevocable trust is a trust that can’t be changed or terminated without the express approval of the beneficiary. After the grantor moves all of the assets into the trust, his or her rights of ownership are completely removed from the assets as well as the trust.
This is the direct opposite of a “revocable trust,” where the grantor is allowed to make changes to the trust.
Why An Irrevocable Trust
Without a trust, all assets not having a named beneficiary will go through and be tied up in probate.
The major reasons for establishing an irrevocable trust is for tax and estate considerations . The way an irrevocable trust will help protect estate assets is how it removes all applications of ownership, and removes the trust’s assets away from the grantor’s taxable estate.
Assets of the following types are able to be held in a trust:
- A business
- Investment assets
- Life insurance policies
- Real Estate
- Patents and copyrights
- Valuable works of art, furniture or antiques
- Valuable collections of stamps, coins, or other object
- Precious metals
When do you need an irrevocable trust?
You should have an irrevocable trust in the form of an ILIT (irrevocable life insurance trust) when your gross estate including life insurance death benefits exceeds $2,000,000 effective January 1, 2013.
How much life insurance should i have in the ILIT?
The rule of thumb formula is: gross estate minus $2,000,000 divided by 2 = inheritance tax coverage needed.
If you are a veteran with assets and want to qualify for veterans aid and attendance benefits or if you want to qualify for Medicaid to obtain long term care or assisted living benefits paid by Medicaid and not your estate.
Transfer of assets must occur 5 years prior to application to Medicaid in this case to qualify. The other alternative to qualify for Medicaid when you have assets is to do a QIT qualified income trust, and this is expensive in attorney fees, approximately $9,000 but may be worth it depending on the care situation needed.
Please contact your Assisted Living Services Of Florida advisor immediately in order to speak with a certified financial expert who will help you and your family get positioned properly and effectively for the future.