Contact UsOur lawyer is trying to talk us into an irrevocable trust and we understand that we would need to file a tax return with it. We were told by another individual that an irrevocable trust income tax return is expensive and time consuming. Can someone give us an opinion on what we are about to enter into?
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William Keats
This is more of a legal determination and does require the services of a lawyer, one who will tell you the pros and cons between a revocable trust and an irrevocable (inter vivos) trust. However, the inter vivos trust is a vehicle for federal tax savings, while the revocable is suited for non-tax objectives. The choice depends on the settlor's decision - either to transfer the property away forever (irrevocable) or to retain the right to get it back at a later date if circumstances should change. (revocable).
The value of the revocable trust is appreciated only when one realizes that it is not permanently binding, but is, in effect, a will. It is a trust created during the settlor's lifetime that the settlor alone has the power to revoke.
The tax return for the irrevocable trust is expensive. The principal advantage is the saving of federal income and estate taxes. The major disadvantage of such a trust is that the settlor loses control of the assets in the trust. The estate exemption now is $5,120,000. You cannot un-do an irrevocable trust once established.
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569 weeks ago
The value of the revocable trust is appreciated only when one realizes that it is not permanently binding, but is, in effect, a will. It is a trust created during the settlor's lifetime that the settlor alone has the power to revoke.
The tax return for the irrevocable trust is expensive. The principal advantage is the saving of federal income and estate taxes. The major disadvantage of such a trust is that the settlor loses control of the assets in the trust. The estate exemption now is $5,120,000. You cannot un-do an irrevocable trust once established.