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Tampa Business Litigation Attorneys / Tampa Irrevocable Trust Attorney

Tampa Irrevocable Trust Attorney

Trusts are an important part of estate planning. They are tools that can outline your preferences for how your property is handled, managed, and eventually distributed. Although there are many different kinds of trusts in Florida, they are all revocable or irrevocable. The grantor, or the person who creates a revocable trust, can terminate it or modify it at any time. The grantor of an irrevocable trust, on the other hand, generally relinquishes their ability to terminate or make changes to the trust. Below, our Tampa irrevocable trust attorney explains the benefits and drawbacks of these types of trusts.

Benefits of Irrevocable Trusts

While you cannot typically change or terminate an irrevocable trust, they still hold many benefits. These include:

  • Asset protection: When you place property into an irrevocable trust, they become judgment proof. This means they are protected from creditors and lawsuits.
  • Tax avoidance: Irrevocable trusts can be structured in such a way to reduce taxes placed in the trust, or avoid them entirely. Irrevocable trusts that are tax-motivated can benefit a spouse, children, future descendants, charitable organizations, and other beneficiaries. It is important to speak to a lawyer who can advise on whether the tax benefits of a trust are applicable in your situation.
  • Life insurance trusts: It is not uncommon for a life insurance trust to be created. This makes the life insurance policy to be owned by the trust, shielding it from taxation on the death benefits.
  • QPRTs and GRATs: Some irrevocable trusts, such as QPRTs and GRATs, can transfer funds and property to the beneficiaries while still allowing you to retain certain rights in the trust. A qualified personal residence trust (QPRT) allows you to remain in a residence rent-free for the duration of the trust. A grantor retained annuity trust (GRAT) pays you a specific amount each year for the duration of the trust.

Drawbacks of Irrevocable Trusts

While irrevocable trusts do have many benefits, they also have certain drawbacks. The first is that they are very difficult to terminate and modify. While it is not impossible, it does become much more difficult. For example, if all parties involved can agree to a modification, an irrevocable trust can be modified as long as it is allowed under the Florida Trust Code. This is not always possible, as it can become difficult for all parties involved to reach an agreement.

Additionally, trusts are also subject to federal income tax. The tax rates for income retained by an irrevocable trust are compressed, which can result in a higher income tax consequence than tax rates for individuals.

Call Our Irrevocable Trust Attorney in Tampa for More Information

It is not easy to determine whether you should place your property in an irrevocable trust. At BBDG Law, our Tampa irrevocable trust attorney can review your situation with you and develop a plan that accomplishes your long-term and short-term goals. Call us now at (813) 221-3759 or fill out our online form to request a consultation and to learn more about how we can help.