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Tamika M. Johnson
Attorney At Law

Tamika M. Johnson Attorney At LawTamika M. Johnson Attorney At LawTamika M. Johnson Attorney At Law
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Tamika M. Johnson
Attorney At Law

Tamika M. Johnson Attorney At LawTamika M. Johnson Attorney At LawTamika M. Johnson Attorney At Law
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FAQ's

Irrevocable Trusts

 

Again, a Trust is a contract between the Grantor (the person who  creates the Trust), the Trustee (one who controls the Trust) and the  beneficiaries (those entitled to benefit from the Trust). You, as  Grantor, determine how the Trust will be operated by the Trustee and who  benefits, how and when.


While a Revocable Trust permits you to maintain full control (as Trustee) and have access to all your assets (as beneficiary), an Irrevocable Trust,  once created, may prohibit your right to control the trust (as Trustee)  or have access to your assets, but you get to decide to what extent.


It is a common misconception that Irrevocable Trusts, once created,  cannot be changed. While that is true of many Irrevocable Trusts created  to avoid taxes (tax reduction or avoidance trusts), it is not true of  all Irrevocable Trusts. An Irrevocable Trust is a Trust you create for  the benefit of yourself or others and once created, you, as Grantor,  must give up your right to something.


Debtor/Creditor law provides that whatever you can get, your  creditors can get. You can have known creditors (i.e., bank/credit card  debt) or unknown potential creditors (unforeseen lawsuits, nursing home,  and divorce).  


 A typical income-only Irrevocable Trust permits you to  receive the income on your assets, but you must give up your right to  your principal. In some Irrevocable Trusts, you can retain the right to  change who gets your assets during your life and after your death, and  maintain 100% control of your assets until your mental disability or  death (also referred to at Asset Protection Trusts).


Tax reduction/Avoidance Trusts are much more restrictive than asset  protection trusts. Typically, you cannot retain any right to control or  access any of the assets in an Irrevocable Tax Reduction/Avoidance  Trust. Please note though, Tax Reduction/Avoidance Trusts only apply to  individuals that as of 2017 have more than approximately $5.4 million in  assets and in in 2018 more than $10 million in assets. 


There are many  Irrevocable Trusts available that are quite flexible and  grantor-friendly.   You should consult a qualified estate planning  attorney to get counseled on all your options before creating an Irrevocable Trust.

This website is designed for general information only. The information  presented at this site is not and should not be construed to be formal legal advice  nor the formation of a lawyer/client relationship.



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