A surviving spouse or other family members receive the credit shelter trust’s income, in addition to the principal as needed. The spouse may have access to whatever assets are required from the principal to cover costs for health, education, maintenance and support. Upon the death of the surviving spouse, remaining assets are distributed to children or other designated beneficiaries.
Trusts and estates Irrevocable trusts
Is an irrevocable trust the right choice for your estate? Learn about the many types of irrevocable trusts and how to set one up.
What is an irrevocable trust?
An irrevocable trust can provide beneficiaries with financial security and, in some cases, tax advantages. There are many irrevocable trust types to choose from depending on your unique circumstances. An irrevocable trust can help to minimize estate taxes, protect assets, provide for a child with special needs or leave a charitable legacy, for example.
Can an irrevocable trust be changed?
Generally, no one can change an irrevocable trust after you establish it. However, some state laws do allow changes in limited circumstances.
Types of irrevocable trusts
You shelter your trust assets from most future creditor claims with this type of trust.
This trust offers opportunities for tax-efficient growth to benefit multiple succeeding generations.
This powerful, but complex, trust offers the potential for tax-efficient transfers of rapidly appreciating assets to beneficiaries, while allowing you to receive annual income from the trust.
A married couple sets up this trust to take advantage of the federal estate tax marital deduction. After the death of one spouse, income from the trust is distributed to the surviving spouse. In some cases, trust principal can also be distributed.
You can potentially reduce your estate tax liability by giving your home or vacation property to your beneficiaries while you still live in it.
A QTIP trust typically benefits both a surviving spouse and children from a prior marriage. It’s a type of marital deduction trust and is often used in tandem with a credit shelter trust.
A trustee legally manages a disabled person’s resources. The assets are owned by the trust – not the individual with special needs – which allows the individual to access public assistance benefits.
Setting up a charitable trust
Charitable trusts provide support for specific charities by setting up one of the following types of irrevocable trusts.
Charitable lead trust
You direct an income stream to qualified charities for a specified length of time. After this time expires, the remaining assets are distributed to named individuals, usually family members.
Charitable remainder trust
You direct an income stream to a beneficiary such as yourself or your spouse. After the death of the last income beneficiary or a specified term of years, the remaining assets are distributed to qualified charities.
Center for Family Philanthropy from U.S. Bank
We partner with you to help:
- Align your giving strategies with your values and goals to create meaningful experiences for your beneficiaries.
- Coordinate between your financial advisor, attorney and other professionals to make charitable giving a part of your overall wealth plan.
- Create a lasting impact for your family and community.
Consider the location of your irrevocable trust.
When setting up an irrevocable trust, choose a location – or situs – where the state laws are favorable to your long-term vision.
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