What Is an Irrevocable Trust?

There are different types of trusts used in the field of estate planning. Some trusts are revocable, and there are also irrevocable trusts that you cannot dissolve or revoke. Let s look at some of the reasons why you may want to use an irrevocable trust. Estate Tax Efficiency The federal estate tax can have a major impact if you have been particularly successful from a financial standpoint. You can transfer unlimited assets to your spouse tax-free as long as your spouse is an American citizen, but transfers to others are potentially taxable. There is a $5.43 million estate tax exclusion during the current calendar year. This is the amount that you could transfer to anyone other than your spouse tax-free. Transfers that exceed this amount would potentially be subject to taxation. There are certain types of irrevocable trusts that can be used for estate tax efficiency purposes. These would include grantor retained annuity trusts, generation-skipping trusts, charitable lead trusts and qu


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