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Home » Resources » Frequently asked questions » Irrevocable Trust FAQs

Irrevocable Trust FAQs

    • Why would you use a trust that that you cannot revoke if there is an alternative?

    • A revocable living trust would be an alternative to an irrevocable trust, and the fact that you would retain the right revocation can be comforting. You would act as the trustee if you have this type of trust, so you would have complete control of the assets while you are living.

      In a real sense, nothing would change with regard to your ability to access the assets without going through a middleman, and there would be no supervision. This is great on the one hand, but on the other hand, the assets would still be in your possession from a legal perspective.

      There are reasons why people want to surrender incidents of ownership. This is a fancy term for the act of removing assets from your own name.

    • Irrevocable trusts are the trusts that people use to avoid estate taxes, right?

    • Yes, high net worth individuals that are exposed to the federal estate tax and/or state-level estate taxes use irrevocable trusts of various kinds to gain estate tax efficiency.

      This being stated, this is not the only reason why you may want to use this type of trust.

    • Can the terms of an irrevocable trust be changed?

    • Generally speaking, the answer is no, but there are some exceptions to the rule.

      The terms of some irrevocable trusts allow for modification of the terms by the trustee or the beneficiaries. Charitable trusts often contain provisions that allow for modifications to adapt to changes to relevant laws.

      A trust can be constructed to allow a trust protector to be engaged by the beneficiaries, the trustees, or a court. This would be an independent third-party that would assess the circumstances and make decisions about a proposed change in the trust terms.

      When an irrevocable trust is being created, it is possible to give the beneficiaries or the trustee a power of appointment that would allow for changes to the trust terms.

    • Why would an ordinary person that is not extremely wealthy use this type of trust?

    • One very common reason why you may want to use an irrevocable trust is to aim toward future Medi-Cal eligibility. More than one third of senior citizens will require nursing home care eventually, and Medicare does not cover the custodial care that these facilities provide.

      Since nursing homes cost over a hundred thousand dollars a year, this gap is a very big deal. Medi-Cal will pay for long-term care, so many people seek eligibility late in their lives.

      In order to get assets out of your name with Medi-Cal eligibility in mind, you could convey them into an irrevocable trust. You would not be able to touch the principal and you could not act as the trustee, but you could receive income that is generated by assets in the trust.

      If and when you apply for Medi-Cal, you could no longer receive the income, but the principal would not count. However, you have to fund the trust at least 30 months before you apply for Medi-Cal coverage.

      People also use irrevocable trusts for special needs planning purposes. A significant percentage of people with disabilities rely on Medi-Cal and Supplemental Security Income. An improvement in financial status can potentially cause a loss of eligibility.

      The person with a disability or a third party can convey assets into an irrevocable supplemental needs trust to preserve benefit eligibility. Assets in the trust would be used by the trustee to improve the beneficiary’s quality of life in many different ways.

      Another type of irrevocable trust that can be very effective if you are a parent that is getting remarried is the qualified terminable interest property trust. If you pass away before your spouse, they would receive income that is generated by assets in the trust for the rest of their life.

      You could instruct the trustee to provide portions of the principal on a discretionary basis if this is your choice, and your surviving spouse would be able to use property that is owned by the trust.

      Though your spouse would be well provided for, they would not be able to change the terms of the irrevocable trust. When they pass away, your children would become the direct beneficiaries of the trust.

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Client Review
July 29, 2020
    

We need to update our Living Trust and attended Schomer Law Group’s seminar. Afterwards we made an appointment and were impressed by the attention Scott Schomer and Liran Aliav gave to our case answering all questions and making suggestions how to minimize the estate tax. All the office staff is very friendly and we highly recommend Schomer Law Group.

Frank & Jutta R
Client Review
July 29, 2020
    

Mr. Schomer does an amazing job at explaining all the intricacies of establishing a trust. He and his team help you every step of the way so you always know what to expect and what you are preparing for. Best education you can get and the best gift you can give your family.

Paula M.
Client Review
July 29, 2020
    

We put off getting a trust for years. After attending a seminar with Scott Schomer we realized that the time had come to get a trust. We were given very good reasons for why we should get a trust. No pressure, just the plain facts. We are very relieved and happy to finally get our trust. Scott and Cesar were very knowledgeable, helpful and listened to our ideas of what we had to say. Any questions that we have now and in the future they are available to assist us to solve them. I recommend the Schomer Law Group and I wish we knew about them years ago.

Phillip G.
Client Review
July 29, 2020
    

When you’re presented with an invitation to attend in a mailer, you may have reservations, this was a truly gift!! My wife and I were educated and guided through the process of creating a family trust.
Both of our parents had attorney’s that “worked” with wills/trusts, but came up short. Fortunately, the Schomer Law Group was there! This is a group of attorney’s that only specialize in estate planning, law, and financial advice, so you know you’re getting expert and personalized advice. This is the best money we’ve ever spent!! Thank you!

Bob L.
Client Review
July 29, 2020
    

We knew we had to update our 10 year old ( 20 page ) trust. After several detailed meetings, Liran and Cesar produced a large ( 300 pages + ) highly detailed trust document that we have used to make sure our family estate is well managed and clearly understood.
They were all very helpful in answering myriad questions and explaining all the various options…

We would strongly recommend the Schomer Law Group to anyone with an estate of even modest means, to assure proper planning…

Bob S.
Client Review
July 29, 2020
    

We had contemplated updating our will and starting a trust for a number of years. After attending a talk by Scott Schomer we realized we were long overdue and the potential downside of not having our affairs in order was significant. Scott and his excellent team made the process simple and seamless. They were great listeners, addressed all our concerns and even pulled and processed all the paperwork from our financial institutions. If you are looking for assistance with estate planning, wills and trusts, we highly recommend Schomer Law Group.

Robert F.
Client Review
July 29, 2020
    

Very competent & informative – friendly atmosphere – ready to answer the most mundane questions – relaxed.

Joan S.
Client Review
July 29, 2020
    

Mr. Schomer was excellent in getting our family trust and estate affairs in order. My husband and I had put off doing this and Scott really made the process easy! He is very passionate in making sure his clients get all that they need and we really appreciated it. I would highly recommend him and look forward to the many years he will be available to assist our family.

Kim

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