An irrevocable trust is a trust that cannot be modified or terminated without the permission of the beneficiary. The grantor effectively gives up all of his or her rights to the trust. Irrevocable trusts are typically created for tax and estate planning purposes and involves three parties - the settlor or grantor, who is the person funding or contributing assets to the trust, the trustee who is the person that manages the trust, and the beneficiary or beneficiaries who is the person or people who will receive the trust’s assets. The trustee holds legal title to any assets held in trust while the beneficiaries hold equitable title. Some reasons for establishing an irrevocable trust include providing ongoing income to family members instead of a lump sum amount and for transferring assets in order to avoid estate taxes upon the death of the grantor.
Another benefit of this structure is that it transfers ownership of assets from the grantor to the trust, thereby relieving the grantor of any tax liabilities created by such assets. This may be beneficial to both the grantor and beneficiaries if the grantor is a substantially higher marginal tax bracket. The key to the tax and estate planning benefits of this type of trust is its irrevocable nature. Generally speaking, a revocable trust would be considered property of the grantor, while an irrevocable trust is considered a separate legal entity that owns the underlying assets. However, the irrevocability also means that once places in such a trust, the grantor has permanently relinquished control of and benefits derived from the assets.
The Investor's Cap Gains Guidebook
Re-invest your capital gains. Defer or Eliminate Taxable Income.
Realized1031.com is a website operated by Realized Technologies, LLC, a wholly owned subsidiary of Realized Holdings, Inc. (“Realized”). Securities offered on this website are offered exclusively through Thornhill Securities, Inc., a registered broker/dealer and member of FINRA/SIPC("Thornhill"). Investment advisory services are offered through Thornhill Securities, Inc. a registered investment adviser. Thornhill Securities, Inc. is a subsidiary of Realized. Check the background of this firm on FINRA's BrokerCheck.
Realized does not provide tax or legal advice. Tax topics discussed are for educational purposes only and are not a substitute for professional tax advice. You should discuss your personal situation with a tax or legal professional.
Hypothetical example(s) are for illustrative purposes only and are not intended to represent the past or future performance of any specific investment.
Investing in alternative assets involves higher risks than traditional investments and is suitable only for sophisticated investors. Alternative investments are often sold by prospectus that discloses all risks, fees, and expenses. They are not tax efficient and an investor should consult with his/her tax advisor prior to investing. Alternative investments have higher fees than traditional investments and they may also be highly leveraged and engage in speculative investment techniques, which can magnify the potential for investment loss or gain and should not be deemed a complete investment program. The value of the investment may fall as well as rise and investors may get back less than they invested.
This site is published for residents of the United States who are accredited investors only. Registered Representatives and Investment Advisor Representatives may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed until appropriate registration is obtained or exemption from registration is determined. Not all of the services referenced on this site are available in every state and through every representative listed. For additional information, please contact 877-797-1031 or firstname.lastname@example.org.