Answers to Common Questions about Irrevocable Trust Planning
This edition of the Koldin Law Center E-Newsletter answers some common questions we receive about Irrevocable Trust planning.
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Question: Is there a gift tax liability incurred when I transfer assets to my Irrevocable Trust?
Answer: For Irrevocable Trusts prepared by the Koldin Law Center, you reserve the right to change the beneficiaries of your Trust. This causes transfers to your Trust to be considered an “incomplete gift” and therefore no gift tax is due.
Question: On my death, will the beneficiaries of my Irrevocable Trust receive a stepped up basis to the date of death value for appreciated assets for capital gains taxes?
Answer: For Irrevocable Trusts prepared by the Koldin Law Center, you reserve the right to change the beneficiaries of your Trust. This qualifies your Trust to be considered a “Grantor Trust” and includible in your estate which results in a stepped up basis under current law.
Question: Can I receive the income from my Irrevocable Trust?
Answer: When the Trust is created, you can either reserve the right to receive all income earned by Trust assets or you can elect not to receive the income.
If you choose to have the Trust written to allow you to receive the income, then if you need long term care in a nursing home, the Trust income will not be protected and will be considered available to be used towards the cost of care.
Question: If the Irrevocable Trust is written to allow me to receive the income, how is the income distributed back to me from the trust?
Answer: This can be done by the Trustees distributing the income to you (the Grantor) in various ways. You could have the income electronically transferred from the Trust account to your account. Your Trustee could also write a check from the Trust account to you for the exact amount of income.
The next edition of the Koldin Law Center E-Newsletter will answer more common questions that we have received about Irrevocable Trust planning.
For more information about Irrevocable Trusts, please see our website by clicking here.
At the Koldin Law Center, P.C., located in East Syracuse, New York, we have over 50 years of experience helping individuals plan for immediate crisis and long term care. Our attorneys are available to discuss your estate planning options, including the advantages and disadvantages of Revocable Trusts and Irrevocable Trusts, along with other estate planning considerations including a Will, Power of Attorney, and Health Care Proxy. We do not charge a fee for the initial consultation. We welcome your children, family attorney, accountant, and/or financial planner to be present at the initial consultation.
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