Irrevocable Trust Lawyer in California

Living trusts are great tools to avoid probate, but their flexible nature prevents them from providing the protection you can get from an irrevocable trust. I can design irrevocable trusts to meet a variety of your needs.

An irrevocable trust in California can do things such as reduce tax liability, protect property from creditors, and help you qualify for Medi-Cal long-term care benefits.

Once you establish an irrevocable trust, the terms can be difficult to change and you cannot remove property you’ve transferred into the trust, so I will review the terms very carefully with you before we finalize everything.

How Trusts Work

Although people tend to think of a trust as a type of account, it’s really a separate legal entity. Some attorneys describe it as a bucket or container for holding your property. That property can include all types of accounts, but it can also include real estate, vehicles, and anything else you can think of.

Once you create a trust and transfer property into the trust, that property no longer belongs to you. Instead, it belongs to the trust. Not only do you lose ownership of the property, in an irrevocable trust you also lose control over it. The property will be managed by a trustee, and you cannot serve as trustee. Depending on the situation, you could be listed as the beneficiary of the trust, which allows some trust property to be distributed to you in accordance with the trust terms and applicable laws, but you will be permanently giving up your right to control the property.

Because the trust property is no longer yours, it becomes much more difficult for creditors to take it. The government usually can’t take it. The property may not be counted toward tax thresholds and ownership limits for government programs. For some people, these benefits don’t have much value. But if you own a business and are at risk from lawsuits and creditors, or if you want to receive government benefits, irrevocable trusts can protect you from substantial losses.

Uses of Irrevocable Trusts

It would be impossible for me to list all the different types of trusts here because estate planning attorneys keep developing new trusts to accomplish specific goals, particularly when it comes to reducing various types of taxes.

Here is a sample of the different types of irrevocable trusts and how they are used:

• Asset protection trusts to isolate assets from potential creditors
• Special needs trusts to provide advantages to individuals with special needs without interfering with their eligibility for government benefits such as SSI and Medi-Cal
• Medi-Cal planning trusts to help establish eligibility for long-term care benefits
• Education trusts to fund college or other expenses for a loved one
• Pet trusts to provide for care of animal companions if you become incapacitated or pass away
• Charitable trusts to reduce tax liability while supporting your favorite causes
• Spendthrift trusts to protect property from being wasted by individuals who are still developing the ability to manage their own money properly, or who might have substance abuse or mental health issues

Families in California who are concerned about the federal estate tax may use a variety of additional trusts to decrease the value of their taxable estates.

Get the Right Trust to Protect Your Family

Since there is so much confusion when it comes to trusts, I am happy to talk to you to explain what an irrevocable trust can and can’t do to help in your particular situation. If you think an irrevocable trust could benefit you or another member of your family, please schedule a free planning session so we can discuss your options.

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Irrevocable Trusts in Ventura County

Irrevocable trusts trade some control today for asset protection and tax efficiency tomorrow, and the right structure depends entirely on your goals. I help Ventura County families weigh whether a dynasty trust, ILIT, QTIP, GRAT, QPRT, IDGT, or bypass trust actually fits before anything is signed.

Irrevocable Trusts FAQs

What is the difference between a revocable and an irrevocable trust?

A revocable living trust can be changed or undone anytime while you are alive, which is why it offers no creditor or estate-tax protection. An irrevocable trust generally cannot be amended after it is funded, and that loss of control is exactly what allows it to shield assets and remove them from your taxable estate.

Will an irrevocable trust save me money on taxes?

It can, but mainly for larger estates. California has no state estate or inheritance tax, and the federal estate tax only reaches estates above the federal exemption, which is in the multiple millions per person, so these trusts are most useful for higher-net-worth families rather than typical estates.

What does an ILIT do?

An irrevocable life insurance trust owns your life insurance policy so the death benefit is not counted in your taxable estate. For a family whose estate would otherwise exceed the federal exemption, that can keep a large policy payout from inflating an estate-tax bill.

Can I undo an irrevocable trust if I change my mind?

By design, you usually cannot simply revoke it, which is the trade-off for the protection and tax benefits it provides. In some cases California law allows modification through beneficiary consent, a court petition, or a decanting to a new trust, but you should never count on undoing one, so the planning has to be right up front.

Related

See also Estate & Gift Tax Planning, Charitable Trusts, Asset Protection, Living Trusts. Serving Camarillo, Thousand Oaks, and all of Ventura County.

Written by Eric D. Ridley — Estate Planning Attorney, Law Offices of Eric Ridley. Serving Camarillo, Thousand Oaks, and all of Ventura County since 2010. Learn more about Eric →