The purpose of estate tax planning is to maximize the assets you pass on to future generations by minimizing gift and estate taxes. Estate-tax strategies revolve around the use of irrevocable trusts. This article discusses the most common types of irrevocable trusts that are used to minimize gift and estate […]
Irrevocable trusts are legal arrangements used to protect and preserve assets for beneficiaries. This article discusses what irrevocable trusts are and what they do.
An irrevocable trust is a legal structure created when a grantor transfers assets or property to a trustee to be held, managed and distributed for the benefit of one or more beneficiaries. Once the trust has been formed, the grantor’s ability to modify the trust agreement, or reclaim the trust assets, is limited. The trust assets are managed for the benefit of the beneficiaries.
Once the trust has been created and assets have been transferred to it, the trustee takes over. The trustee is responsible for managing the trust assets and distributing them to the beneficiaries according to the terms of the trust agreement. The trustee is legally obligated to act in the best interests of the beneficiaries and must adhere to the terms and conditions of the trust agreement. Often, the trustee and the grantor are different people. Depending on the type of irrevocable trust, it may not be possible for the grantor to act as trustee without causing adverse tax consequences.
Creating an irrevocable trust can have important state and federal tax consequences. For income-tax purposes, there are two general categories of trusts: grantor trusts and non-grantor trusts. Grantor trusts are disregarded for income-tax purposes, while non-grantor trusts are treated as separate taxpayers. Both types of trusts have the potential to save estate taxes. A full discussion of these tax issues is beyond the scope of this article, but the articles linked in this paragraph provide a more in-depth analysis of these issues.
Irrevocable trusts can be used for various purposes, such as providing for family members after the grantor’s death, protecting assets from creditors, avoiding probate, transferring assets to a beneficiary in a tax-efficient way, or supporting charity. Valur generates trusts that are geared toward minimizing estate and gift tax, state income tax, and capital gains tax.
We’ve built a platform to give everyone access to the tax and wealth-building tools typically reserved for wealthy individuals with a team of accountants and lawyers. We make it simple and seamless for our customers to take advantage of these hard-to-access tax-advantaged structures. With Valur, you can build your wealth more efficiently at less than half the cost of competitors.
From picking the best strategy to taking care of all the setup and ongoing overhead, we make things simple. The results are real: We have helped create more than $3 billion in additional wealth for our customers. If you would like to learn more, please feel free to explore our Learning Center. You can also see your potential tax savings with our online calculators or schedule a time to chat with us!
