Irrevocable Living Trusts
“We all have a desire to create something to show we were here.” -Ferry Porsche
Unlike a revocable living trust, you lose ownership and control over property you place into an irrevocable trust. An irrevocable living trust differs from a revocable living trust because you cannot control it, and you cannot change it.
Irrevocable trusts are powerful tools for asset protection and tax avoidance. If drafted properly, you can give assets to your irrevocable trust and remove those assets out of your name. This provides protection from divorce, creditors, nursing homes, and judgements. By giving property to the irrevocable trust, you no longer own the property. Instead, the trust owns the property. You must surrender all incidents of ownership over the asset moved into the trust. Moving the assets into your irrevocable trust can reduce the size of your taxable estate, avoid death taxes, and shift the income tax burden away from you.
By planning ahead of when you or your loved one might need long term care, you can shield homes, bank accounts, and other assets from nursing homes. There is a 5-year lookback period, so planning ahead is vital to successfully protecting these assets. If you wait until you or your loved one needs long term care, it may be too late. The average cost of a skilled nursing home in New Jersey is $11,254 per month, or $135,048 per year. Putting a plan in place can save you and your loved ones hundreds of thousands of dollars that would otherwise go to a nursing home.
Some common irrevocable trusts include irrevocable life insurance trusts (ILIT), Medicaid asset protection trusts, dynasty trusts, qualified domestic trusts (QDOT) for those who are not U.S. Citizens, martial trusts, spousal lifetime access trusts (SLAT), and charitable remainder annuity trusts (CRAT).
By setting up a plan today, you can protect hundreds of thousands of dollars down the road.
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