This is general trust information that has been gathered from various legal sources and is not intended to be offered as a document created by
Revocable/Irrevocable Trusts
Here we examine the differences of revocable trusts vs irrevocable trusts. If you reposition (transfer) your assets through the use of an IRREVOCABLE TRUST, you will no longer own them. If you don’t own assets, no one will want to sue you; no one will want to track your spending habits; no one will call you to interrupt your dinner. You don’t have to go offshore. US Laws, US courts will defend and support your asset protection system. These laws have been defined by numerous court cases, over and over, right up to the Supreme Court. You must however, give-up control over your assets to a true independent trustee.
Legitimate repositioning (transfer) of assets from you to an irrevocable trust is perfectly legal. The fact is, if your assets are owned by a subchapter S. Corporation or a Limited Liability Company and in turn the shares of the Sub S or membership units of the LLC are owned by an irrevocable trust, it’s the fortress of US Asset Protection. The ultimate asset protection device is the use of an offshore asset protection trust.
| The following financial grid explains the major differences between revocable vs. irrevocable trusts: FEATURES/BENEFITS | REVOCABLE TRUST (REVOCABLE LIVING TRUST) | IRREVOCABLE TRUST |
| Asset Protection | ABSOLUTELY NO Asset Protection. NONE. The Grantor, The Trustee, and the Beneficiary are generally the same person. The Grantor did not give-up control of the asset(s). | YES. The Grantor no longer owns the assets. Assets have been transferred to the INDEPENDENT Trustee who has a fiduciary duty to manage the assets for the benefit of all beneficiaries, which may include the Grantor. |
| Eliminate Probate | YES | YES |
| Eliminate Estate Taxes | NO | YES. Assets are not subject to the Estate Tax. The deceased did not “own” the assets or have assets in his possession at the time of his death. |
| Form 1040 income tax benefits | YES. You have done nothing. You still “own” the assets. All Income and Expenses flow-through to the Grantor’s form 1040. | YES. If this is a Grantor-Type Trust, for income tax purposes, all income and expenses can flow through to the Grantor’s form 1040. |
| Comments: | The Revocable Trust is designed to eliminate probate. DOES NOT eliminate estate taxes; ABSOLUTELY NO asset protection. The Revocable Trust is nothing more than an extension of your will. | For asset protection purposes the trust is irrevocable. Under certain conditions, the trust can be designed to be a pass-through trust |