Some individuals don’t like irrevocable trusts because grantors can’t change or revoke them. But an irrevocable trust comes with many benefits like protection from creditors, government benefits and savings on estate taxes.
If you’re thinking about creating an irrevocable trust, read about these four types below.
Charitable Trust
There are three types of charitable trusts: charitable lead trusts (CLT), charitable remainder trusts (CRT) and pooled income trusts.
-CLT involves putting property into a trust and then picking a charity to receive income for a specific amount of time. Nonetheless, a grantor has to designate a final beneficiary.
-CRT also entails putting property into a trust and selecting a charity to receive income for a limited amount of time. However, said charity is named the final beneficiary.
-A pooled income trust lets grantors pool money together for a certain amount of time, and the charity is both the beneficiary and trustee.
Bypass Trust
Sometimes known as a family trust, a bypass trust aids a family in saving on estate taxes. In addition, a grantor can create it to provide income for a surviving spouse or other relatives.
QDOT (Qualified Domestic Trust)
A qualified domestic trust permits a surviving tax paying spouse to receive a marital deduction on estate taxes. It’s ideal for those married to a non-U.S. citizen.
QPRT (Qualified Person Residence Trust)
With a qualified person residence trust, a grantor shifts their title to their residence to a trustee while maintaining the right to dwell in said home for a certain period. When the time period ends, the grantor — provided that they’re still alive — passes their home to their beneficiaries.
Irrevocable trusts can greatly aid you and your beneficiaries. If you’re still unsure which kind of irrevocable trust is right for your needs, it helps to reach out to experienced legal assistance.