We hope your afternoon caffeine intake has put some pep back in your step, as it is time to expand some neurons. Part 3 of 6 Types of Irrevocable Trusts starts now: 3. Credit-Shelter Trust (also called a Family Trust or a Bypass Trust) This is designed to enable a married couple to effectively double the amount they can protect from estate taxes by setting up a trust with an amount equal to the estate tax exemption ($700,000 in 2002). There are some important restrictions on such trusts, most notably the fact that they can only be funded with assets that the spouses own separately rather than jointly (although retitling circumvents this limitation). 4. Generation-Skipping Trust (also called a Dynasty Trust) This enables a grantor to transfer up to $1 million (or $2 million for a married couple) to family members at least two generations younger (usually grandchildren). Grants in excess of this amount are subject to a 55% generation-skipping transfer tax. 5. Irrevocable Life Insurance Trust This simply enables the shielding of life insurance from estate taxes. 6. Qualified Personal Residence Trust This enables the shielding of a home from estate taxes. Many of the same suggestions for living trusts also apply for irrevocable trusts: get help from a qualified professional; keep all the relevant documentation in a safe place; choose the trustee carefully; and talk to the beneficiaries about the trust. Remember always consult a qualified professional, surround yourself with those who know what you do not, conduct your diligence thoroughly and take action!!
Posted on: Tue, 13 Jan 2015 21:04:00 +0000