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Dallas Estate Litigation and Planning Blog

Everything You Need To Know About an Irrevocable Trust

Planning what will happen to your estate when you are no longer around can feel overwhelming. Among the many challenges you may face is the question of what the tax implications of the transfer of assets might be for you or your heirs. Fortunately, an irrevocable trust is a useful tool that has significant tax benefits for both the creator and the beneficiaries of the trust.

As with most financial tools, irrevocable trusts have their drawbacks as well. Having a full understanding of the advantages and disadvantages of irrevocable trusts can help you make an informed decision as to whether they might be a useful part of your estate plan.

If you have pressing questions about Irrevocable Trusts, don’t hesitate to contact the experienced legal team at Staubus and Randall. We’re here to help.

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What Is an Irrevocable Trust?

An irrevocable trust removes taxable assets from the grantor’s estate and transfers them into a trust under the control of a trustee. When the trust is created, the grantor sets up specific conditions under which the assets should be distributed to the beneficiaries.

The key provision that gives an irrevocable trust its name is that once the grantor places an asset into an irrevocable trust, they are then unable to revoke the trust, remove the asset from the trust, or change the list of beneficiaries. In other words, except for in certain rare circumstances that generally require the approval of both the court and the beneficiaries, the grantor permanently loses any legal ownership claims to those assets as soon as the trust is created.

The inability to change an irrevocable trust is one of its main downsides. However, some people will find that the benefits greatly outweigh the drawbacks.

What Are the Benefits of an Irrevocable Trust?

An irrevocable trust offers many advantages when it comes to planning and distributing an estate. These include:

  • Taking advantage of the estate tax exemption – Once a property has been transferred to an irrevocable living trust, it is no longer included in the gross value of an estate. This can be particularly helpful for minimizing the tax liability of estates that are very large.
  • Spendthrift protections – The grantor of the trust can stipulate specific conditions for when and how the assets should be distributed. For example, a parent may decide that a child who is a beneficiary should not receive the assets until they have reached a certain age, so that the child does not misuse the money they inherit.
  • Protection against creditors – Courts generally rule that since beneficiaries are not capable of voluntarily transferring the future rights of the trust to another person, creditors should not be able to confiscate these assets.
  • Preserving income – An irrevocable trust allows the grantor to put assets into their trust while simultaneously retaining the income from those assets.
  • Protecting asset value – Appreciable assets that are placed into an irrevocable trust are removed from the estate while also giving beneficiaries a step-up basis for purposes of appraising the assets for tax purposes.
  • Transferring a home – An irrevocable trust allows you to gift a principal residence to your children under tax rules that are far more favorable to them.
  • Protecting life insurance proceeds – You can house a life insurance policy in an irrevocable trust as a way of removing the death proceeds from the estate.
  • Qualifying for government benefits – Placing a large proportion of your assets into an irrevocable trust can ensure that you are eligible for Social Security income and Medicaid for nursing home care. You can also set up an irrevocable trust for a special needs child in order to keep any assets they inherit from disqualifying them from government benefits.

While these benefits may make an irrevocable trust a great solution for your estate plan, it is important to recognize that setting up this type of trust is a complex process. For this reason, it is important to work with an estate planning attorney who has experience creating irrevocable trusts. You can have the peace of mind that your assets are being managed in a careful manner that is tailored to your family’s specific needs. Contact us today.

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Contact an Experienced Dallas Estate Planning Attorney

If you feel that an irrevocable trust is a good option for your estate planning needs, or if you have more questions about how they work, the seasoned Dallas estate planning attorneys of Staubus and Randall are here to help. Our skilled and knowledgeable lawyers have helped many clients create irrevocable trusts to ensure that their families can receive their assets without unreasonable tax burdens. Contact us today for a consultation, and we will let you know what all your estate planning options are. Call us now at 214-691-3411.

The Firm

The attorneys at Staubus and Randall have over 100 years of combined experience in estate planning, probate, and litigation. We have the knowledge and skills to tackle complex legal issues, such as guardianships, will contests, fiduciary litigation, and trust litigation. We can also handle routine matters, such as estate administration, probating wills, heirship determinations, and other probate court matters.

Staubus and Randall received a preeminent AV rating from Martindale-Hubbell, which is the highest rating possible from a peer-rated legal service. This rating recognizes our hard work, dedication, and the case results we’re able to achieve.

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What Our Clients Say

"I recently had the occasion to hire Mr. Staubus for a hotly contested Guardianship matter. Mr. Staubus brought a rare combination of effectiveness, reasonableness and understanding of the human element involved. Mr. Staubus handled all things in a calm, highly competent, effective and reasonable way. It could not have been as easy as he made it seem. He's a credit to the Bar."

Jody

"Before retaining the guidance of the Staubus & Randall firm, I was at my wit's end trying to close an uncle's estate as a co-executor. In addition to dealing with difficult heirs, I had other pressing business issues coming up immediately on estate land in the middle of the Eagleford Shale including dealings with pipeline, seismic, oil & gas, and construction companies. The local bank also refused to give me access to information relating to the estate. This quickly became the most stressful and desperate time in my life...and then I found Joseph Legere who truly became my guardian angel. He was able to get all issues resolved efficiently and the estate fully closed. His professionalism, immense legal knowledge on a wide variety of topics, and amazing communication skills took the burdens off of me and quickly got closure. I am forever indebted to this firm for giving me my life back."

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Joann

"Keith Staubus and Julie Blankenship and their team represented me in a jury trial in the probate court where the ownership of the business which I had worked hard to build was at stake. They successfully fought to preserve my business and my professional reputation, working masterfully to gain the support of the jury. I would not hesitate to hire them again in any bet-the-company litigation.”

Karen

"I have required legal representation twice in my life in two separate will contests. Both times I sought assistance from Keith Staubus and Staubus/Randall. Their service, approach, and determination to obtain results exceeded the other attorneys in each case. Mr. Staubus has always come across as genuine while being direct. He gets the process done in a timely manner with results. I will certainly use him again when and if any new challenges arise.”

David

"After my husband's death, I was devastated by having to defend against a vicious dispute over my husband's estate. Julie Blankenship and Keith Staubus made me feel very comfortable in this distressing situation. They were very tough and did an excellent job for me in obtaining a summary judgment in my favor without a full jury trial. I was glad to have them and Diane Walker in my corner to help me achieve an excellent result - I won! If I ever had to go back to probate court, I would hire them again.” - (will and trust construction case)

Flo

"If you need intervention for someone you love but don't know where to turn or who to turn to, Julie Blankenship and Keith Staubus helped me through the most difficult and stressful time in my life with a much loved family member. I now believe that good will triumph over evil. They fought for what was right, and good prevailed." (contested guardianship and will contest)

Janet

"As a professional money manager, I have used Ryan Randall's estate planning services both personally and for my clients. Ryan has exhibited three critical attributes in his work with me: (1) high intellectual capacity, (2) exceptional thoroughness, and (3) a total commitment to integrity. In today's litigious world, it can be quite costly not to "get things done right.” An added bonus to us was that we found one of the nicest people we could imagine.”

John

"I was represented by Keith Staubus as an income beneficiary in a lawsuit with the trustee of a family trust. Utilizing the expertise of a forensic accountant and his own trust expertise, Keith was able to negotiate a judicial modification of the trust providing for the buyout of my income interest for a substantial lump sum payment out of the trust, resulting in a win-win situation for all of the parties. I highly recommend Staubus/Randall for any trust disputes and trust modification actions."

Kathy

"I have been a wealth management specialist and retirement plan consultant with the Dallas/Fort Worth financial community for over 20 years. I have engaged Ryan Randall to work with a number of my best clients over the years, including business owners, professionals and families. My clients always appreciate Ryan’s straightforward approach to estate planning, asset protection planning and business succession planning. He makes even the most sophisticated estate planning strategies understandable."

Larry

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