Types of Irrevocable Trusts
These estate planning vehicles might not be as flexible as revocable trusts, but settlors still have a number of options. Some alternatives that might meet your needs include:
- Special Needs Trusts: A beneficiary spends the money in the trust for the benefit of a child with special needs who require institutional or other intensive care. Since the beneficiary does not own the property, the special needs child usually qualifies for various government benefit programs.
- Spendthrift Trusts: By including a special provision in the trust language, the settlor limits access to the corpus. These restrictions could be a regular allowance or a milestone provision (e.g. the beneficiary receives full access after age 30). At the Dilendorf Law Firm, our team advises you as to the types of restrictions that are enforceable in court.
- Charitable Trusts: Settlors use the property during their lives, and upon their deaths, the corpus passes to a designated charity. The settlor loses no benefit, the charity receives a substantial gift, and no one goes to court. Everyone wins.
- Life Insurance Trusts: If a trust, as opposed to an individual, owns a life insurance policy, the proceeds are not taxed as heavily. Therefore, the beneficiary, who could be the life insurance beneficiary or another person, keeps more of these proceeds.
When making an irrevocable trust, choose your trustee wisely. It’s not impossible to alter the trustee, but it is difficult. It is much better to get it right the first time. Furthermore, an irrevocable trust’s language must be very precise. Once it is in place, it is almost impossible to alter.
When is an Irrevocable Trust Revocable?
We live in extremely volatile times. It is not unusual for financial circumstances to change drastically. If that happens, your estate plan might need to change as well. In New York, such change is possible, even if you have an irrevocable trust.
The beneficiaries can agree to a change if they all agree. As long as the revocation or amendment is in everyone’s best interests, such changes are usually not hard to make.
Additionally, New York law allows a trustee to move the corpus of one trust into another, newly-created trust, as long as the underlying rights and responsibilities of all parties involved, mostly the trustee and beneficiaries, are unaffected. Trustees can unilaterally make such changes. There is no need for the beneficiaries to consent.
In the right situation, an irrevocable trust is an excellent estate planning tool. For a confidential consultation with an experienced estate planning lawyer in New York, contact Dilendorf Law Firm, PLLC.
New York Irrevocable Trust Lawyers
Dilendorf Law Firm
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At the Dilendorf Law Firm, our secure online portal is available to help families craft their irrevocable living trust documents. Our attorneys are available for consultations throughout the private and secure document preparation process. Once your documents are complete, we execute them in accordance with the law, so you have complete peace of mind.