October 3rd, 2013
 
HOW TO USE AN IRREVOCABLE

FAMILY TRUST

DURING LIFE

IN ESTATE PLANNING


One of the principal ways to protect your assets from being wiped out to pay for nursing home costs and uncovered medical expenses, avoid probate and reduce your estate and income taxes is to gradually place some of your assets into an Irrevocable Family Trust.

The purpose of this short letter is to give you a brief explanation of what an Irrevocable Family Trust is and how it can be used to accomplish many of your estate planning goals.

Hope this helps.


I. What is an Irrevocable Family Trust?

An Irrevocable Family Trust is an inter vivos trust (one you set up during your life) that is managed by Trustees (usually your children) for the benefit of the beneficiaries (usually your children and grandchildren). The Trust is called irrevocable because it cannot be amended or terminated by you, the grantor alone, once you set it up.

It should be noted that while the grantor (you) cannot revoke the trust by yourself, New York law (EPTL Sec. 7-1.9) allows an Irrevocable Family Trust to be amended if the grantor (you) and the beneficiaries of the trust (usually your children) agree to the amendment. So while the Trust is "Irrevocable," it can be amended by your and with the consent of your children at any time.

Also a provision can be added called a limited power of appointment, that would allow you alone to cut out any beneficiary, usually a child or grandchild that you wished to cut out at any time. For example, if a child behaves in a way that upsets you or a grandchild got into drug or alcohol abuse or estranged themselves from the family, you could eliminate them as a beneficiary or reduce their interest in the trust if you wanted to without anyone's consent. This gives you tremendous power over the trust even though it is irrevocable. 

II. Why use an Irrevocable Family Trust in Estate Planning?


While this is certainly not an all inclusive treatment of the subject, I hope this short discussion will take some of the mystery out of the use of irrevocable trusts for estate planning.

I offer a free office conference to discuss how an Irrevocable Family Trust might be used by you to accomplish your estate planning goals.

Warmest personal regards,


Dick
D. Victor Pellegrino
 
Member: National Academy of Elder Law Attorneys

Elder Law, Trust and Estate and Tax Sections of the New York State Bar Association



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Last Updated:  October 3, 2013

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