Another estate-planning service we provide here at Meaney & Meaney PC is creating irrevocable trusts. An irrevocable trust, as the name suggests, is a trust that cannot be changed after it is created. For example, clients who wish to avoid Medicaid liability if they end up needing long-term disability care, such as in a nursing home, might choose an irrevocable trust.
Why should you consider an irrevocable trust as part of your estate plan?
Some benefits include …
- Estate tax reduction. Irrevocable trusts are commonly used to remove the value of property from a person’s estate so that the property can’t be taxed when the person dies.
- Asset protection. This works in the same way that an irrevocable trust can be used to reduce estate taxes. By placing assets into an irrevocable trust, the creator of the trust is giving up complete control over, and access to, the trust assets and, therefore, the trust assets can’t be reached by Medicaid or a creditor.
- Charitable estate planning. Clients who make an initial transfer of assets into a charitable trust while still alive will receive a charitable income tax deduction in the year the transfer is made. Or, if the initial transfer of assets into a charitable trust doesn’t occur until after their death, the estate will receive a charitable estate tax deduction.
- Of course, there is much more to an irrevocable trust than can be covered in a brief newsletter, including some disadvantages. It all depends on the particular person. Contact Meaney & Meaney PC at 631.427.2900 for a free consultation to discuss whether an irrevocable trust is right for you or your client.