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At Colorado Estate Matters, our skilled Denver estate planning attorneys are experienced in developing irrevocable trusts and helping to oversee their administration once they’re in place. When you are ready to develop an irrevocable trust, don’t hesitate to contact an experienced Denver irrevocable trust lawyer.
To learn about your different options and the best solutions for safeguarding your loved ones and assets well into the future, schedule a free consultation by calling (303) 713-9147.
Irrevocable trusts are estate planning tools that can’t be altered after they’ve been authorized (signed) and officially put into effect. These types of trusts are the counterparts to revocable living trusts which may be altered at any point in the future by the trust maker or grantor.
Our Denver irrevocable trust lawyer can establish one or more irrevocable trusts, depending on who you wish the beneficiary to be and how you want to provide assets or income for them.
Irrevocable life insurance trusts (ILITs) are funded by life insurance policies instead of other assets. The policyholder can name the trust as the beneficiary of the policy, and the benefits are placed in the trust upon their passing. At that point, the trust functions like any other trust with a trustee administering its assets and distributions.
A grantor-retained annuity trust (GRAT) is funded by an annuity and is used to minimize the taxes on large financial gifts to family members. Grantors may be able to gift appreciated assets to the trust tax-free.
Annuities may be paid into the GRAT during the term of the annuity; at this time, only the grantor is the beneficiary of the trust. After the annuity period ends and the trust expires, the beneficiary receives the assets and pays little to no gift taxes.
A Charitable Lead Trust (CLT) benefits a qualified nonprofit, designated as 501(c)(3). The organization receives income from the trust for a set period of time. At the end of the donation period, the assets revert back to the trust owner or are distributed to their heirs.
A Charitable Remainder Trust (CRT) is the reverse of a CLT. In these cases, the trust pays a beneficiary during their lifetime and the remainder of the trust is allocated to the named charity upon the beneficiary’s death.
A special needs trust is one that’s specifically designed to benefit individuals with disabilities, allowing them to access additional financial resources without losing eligibility for government benefits such as Medicaid and Supplemental Security Income (SSI).
Although these are often created by the beneficiary’s family members, they can also be created by the individual as a form of long-term financial planning. The trustee has the discretion to make decisions about how the trust’s assets should be used, but they’re required to act in the beneficiary’s best interests at all times.
Qualified personal residence trusts allow a homeowner to remove their home from their estate to reduce the amount of gift tax that might be incurred when transferring assets to a beneficiary. You may live in the home while it’s part of the QPRT. In order to take advantage of those tax benefits, you must outlive the term of the trust. If you pass before the trust expires, then the property will be included in your estate.
Some of the specific benefits associated with irrevocable living trusts include tax benefits and asset protection benefits.
When you create an irrevocable trust and transfer certain assets to it, those assets become the property of the trust. This effectively means that you and your beneficiaries do not directly own these assets. As a result, you generally won’t be responsible for paying the taxes on these assets.
Additionally, there may be federal or state tax exemptions that specifically apply to trusts which can provide you and/or your beneficiaries with further financial savings. The tax benefits of irrevocable trusts can also come into play with charitable estate planning, as a trust maker or his
beneficiaries may be able to benefit from charitable tax deductions in the future if the irrevocable trust contains terms for charitable donations.
Assets transferred to irrevocable trusts are not considered to be owned by the trust maker or the beneficiaries. These assets can be protected from creditors in the near future. Assets are not considered when it comes to the beneficiaries’ eligibility for government benefits.
This is at any point in the future. Beneficiaries of irrevocable trusts can obtain financial support and benefits from the trust. They can rest assured that these assets will be outside of the reach of creditors. Considerations for government assistance if or when these issues arise at any point in the future.
Below are some assets that could be transferred into an irrevocable trust. An irrevocable trust can also hold and protect those assets. This includes (but is not limited to):
The trustee is required to submit an accounting of the trust to the government each year, including any gifts or added assets and distributions. The owner of the trust (the grantor) must also be provided with an accounting of the trust.
Trust regulation and compliance can be complex, and a mistake in the reporting could end up costing thousands in fines and may jeopardize the status of the trust and its assets.
At Colorado Estate Matters, our services include administering a trust and completing all required reporting on its behalf. We also keep abreast of changes in government compliance for an irrevocable trust.
If changes or modifications to the terms of the trust can be made with the written consent of all parties, then a Denver irrevocable trust lawyer can make the appropriate changes and submit the modified trust to the court for approval. If one or more parties don’t agree to the proposed changes, a court order may be necessary to effect the change or terminate the trust if it no longer serves its material purpose.
One of the most common challenges to an irrevocable trust is questioning whether it is achieving its material purpose. This could happen when decades have passed and all primary and secondary beneficiaries have passed away, or if misuse of the trust is suspected.
Trusts may also be contested if excluded interested parties had reason to believe that they would benefit from the trust. These challenges are similar to challenging a will; the excluded heirs may assert that the trust was created with undue influence.
Some of the legal strategies we employ with irrevocable trusts include:
Speak with a Denver irrevocable trust lawyer who will work with you to determine your financial goals and draft irrevocable trusts that help you achieve them.
When you are ready to develop an irrevocable trust, or you need assistance administering any type of trust, you can rely on a Denver irrevocable trust lawyer from Colorado Estate Matters, Ltd.
We provide a thoughtful, comprehensive approach to our client’s estate planning, elder law, and other legal needs. We take pride in helping each of our clients and their families find the best solutions for them.
Our Denver estate planning attorneys use a variety of traditional and innovative approaches to develop effective solutions tailored to our client’s needs and objectives. Our goal is to help our clients efficiently navigate the complexities of the law. They now can develop effective, prudent solutions that will protect them, their assets, and their families in the future.
To learn more about irrevocable trusts, schedule a free consultation by calling (303) 713-9147 or contacting us online.