When planning your estate, you may find that you have two specific needs: to reduce your tax burden and to protect your assets and property. One way to do that is to set up an irrevocable trust.
Through this process, you place a certain amount of your assets and property in the trust. Once you finalize the trust, you cannot take it back: the assets contained within it are technically no longer yours. This provides several key benefits to grantors and their loved ones:
- It avoids probate, allowing your beneficiaries to receive the assets in the trust more quickly after your passing.
- The trust offers greater privacy than a will does, because wills are public records. You can keep the trust and all its provisions completely private.
- You can continue to draw income on investments from the trust even though you won’t have access to the assets themselves.
- Because the assets belong to the trust, and not you personally, you cannot be taxed on them. This is particularly useful for estates worth more than the federal estate tax exemption limit of $5.95 million.
On the other hand, irrevocable trusts can cause some discomfort, because you are essentially giving up control of your assets and allowing others to manage them. Trusts also pay income taxes at higher rates than individuals. However, you can set up an irrevocable trust in a way that distributes assets so that the trust qualifies for a lower tax bracket. A skilled estate planning lawyer can provide further guidance.
To fully explore all the tools available to you as you plan for the years ahead, speak with a knowledgeable Pittsburgh estate planning attorney at Feldstein Grinberg Lang & McKee, P.C.
