An irrevocable trust is an estate planning document that cannot be changed after the document has been signed and the structure of the trust becomes irrevocable after the person who created it passes away. An irrevocable trust can be used to generate multiple separate trusts for the benefit of the surviving spouse or multiple children.ThinkstockPhotos-76806707

The estate tax reduction through AB trust can be extremely beneficial but it can also provide asset protection and may even allow an irrevocable trust to name the settler’s family as lifetime beneficiaries. The trust may need to file its own tax return and pay at the trust tax level depending on the structure of the irrevocable trust. Consulting with a Pasadena estate planning attorney is strongly recommended if you find yourself in this situation.

One way to make a trust simple to set up involves using an irrevocable life insurance trust. The premiums for the policy are paid into the trust and that is then used to keep the policy active. However, if the person paying the premiums suddenly stops doing so, that trust becomes unfunded and the policy could lapse. As with all trusts, this is only a valuable tool if it’s properly funded.

Setting a calendar reminder to pay the premiums so that the policy remains active ensures that your original intentions in creating an ILIT will remain protected. If you have further questions, a Pasadena estate planning lawyer can help.

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