If you have a large estate, an important aspect of creating an estate plan to fit your needs is determining how to avoid federal estate taxes, since these can substantially diminish the amount of your estate that can be passed to your beneficiaries upon your passing. As of 2021, the Unified Tax Credit has been increased to $11.7 million per individual, and a collective $22.8 million for a married couple, before your estate is taxed. This means that a very small amount of estates as of now will need to use a trust to avoid estate taxes, but establishing an irrevocable trust is the best available option for those estates which are above the threshold for estate taxes. However, this tax credit fluctuates every year and is determined by the Federal Government, who may choose to lower the amount which is exempt from estate taxes in the future.
An irrevocable trust cannot be altered, in part or in whole, once is it created. One disadvantage to this is that you will lose the ability to control the assets of the trust once they are placed inside of the trust, which may include money, real estate, investments, life insurance policies, businesses, and other property. However, an advantage to this is that all the assets places in the irrevocable trust are removed from your estate, which will make it a convenient method in keeping the value of a large estate within the threshold of the Federal Estate Tax limitations.
Although an irrevocable trust does not eliminate taxes altogether, it does create a taxable legal entity separate from your estate. This means that your irrevocable trust may be taxed at a lower rate than when your assets are combined as a part of your entire estate. An additional benefit is that the assets inside of the trust receive protection from creditors.
Lastly, a trustee who is appointed to manage the irrevocable trust can live outside of Florida and does not need to qualify through the probate court, unlike a Personal Representative of a Last Will and Testament. Unlike a Last Will and Testament, trusts are entirely private and are not available to the public.
Although creating an irrevocable trust is an advantageous estate planning tool, setting one up can be labor intensive and very detailed. This means that an experienced estate planning attorney who the proper expertise in handling irrevocable trusts will be a necessity in establishing this type of trust. You will need an estate planning attorney who will sit down and take the time to examine your estate to determine whether this is the best estate planning tool for your situation and your goals. It is also important to remember that, once assets are transferred into the irrevocable trust, you cannot undo anything without the permission of the trust’s beneficiaries because you have relinquished ownership of those assets, so careful planning is a necessity.
On the other hand, you maintain complete control of all trust assets in a revocable trust until your death. It is only upon your death or incapacity that your revocable living trust becomes irrevocable.
In recent years (specifically in October of 2018), Florida’s Trust Code and the United States Department of Veterans Affairs rules governing irrevocable trusts have been revised, which means that it is imperative that the estate planning attorney who creates your irrevocable trust is experienced and up-to-date with the current law.
An irrevocable trust can often provide significant benefits when it comes to managing your estate, but an estate planning attorney who is highly skilled in estates and trusts and has the most up-to-date knowledge of current law should be trusted to handle this endeavor. You can rest assured that the estate planning attorneys at the law firm of Gorman & Jones, PLC will use their many years of experience to examine your entire estate and listen to your goals to determine whether this estate planning strategy is the right one for your situation. If an irrevocable trust is the right tool for your estate planning needs, our attorneys will ensure that all aspects of your trust adhere to your needs and will prevent any mistakes that could potentially cause problems in the future for you or your heirs.
To receive more information regarding irrevocable trust and your estate planning needs, call the law offices of Gorman & Jones, PLC at (813) 856-5625 today to set an appointment to meet with one of our estate planning attorneys at our office conveniently located in Tampa, Florida.
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