Connors and Sullivan, Attorneys at Law, PLLC
For a complimentary consultation
212-235-1339 718-414-6209

Two important things to know about irrevocable trusts

An irrevocable trust is a legal tool that can help shelter funds from creditors. A wisely structured trust can help to better ensure an intended heir not only receives their inheritance but also gets an inheritance that is protected from attempts by creditors to claim ownership interest in the funds.

Although a grantor can draft this tool to meet a number of wishes, some common errors can negate the benefits of the irrevocable trust.

Two common issues to watch out for include:

  1. Trustee designation issues. It is not uncommon for a grantor to name the intended beneficiary as the trustee for the irrevocable trust. Although the grantor may feel this designation allows the intended beneficiary control over his or her inheritance, it can also remove the protections that are one of the primary benefits of this trust structure. If the grantor lists the intended beneficiary as the trustee, a creditor could have access to the funds. This means the funds could be subject to division if the beneficiary ever goes through a divorce.
  2. Mandatory income provision considerations. Grantors often include mandatory income provisions within a trust. The grantor may use this provision to instruct the trustee to provide income to the beneficiary to support the “health, education, maintenance and expenses” of the beneficiary. Some have challenged the presence of this provision to qualify the regular income payments from the trust as a marital asset. This is another argument that could open the funds up to potential creditors.

These are just two considerations to discuss with legal counsel before incorporating an irrevocable trust into your estate plan.

No Comments

Leave a comment
Comment Information

Office Locations

Brooklyn:
Connors and Sullivan, Attorneys at Law, PLLC
7408 Fifth Avenue
Brooklyn, NY 11209

Phone: 718-414-6209
Fax: 718-238-2616
Brooklyn Law Office Map

Manhattan:
Connors and Sullivan, Attorneys at Law, PLLC
880 Third Avenue
New York, NY 10022

Ph: 212-737-2700
Map & Directions

Bayside Queens:
Connors and Sullivan, Attorneys at Law, PLLC
200-20 Northern Boulevard
Bayside, NY 11361

Ph: 718-225-7200      
Bayside Law Office Map

Middle Village Queens:
Connors and Sullivan, Attorneys at Law, PLLC
79-43 Metropolitan Avenue
Middle Village, NY 11379

Ph: 718-238-6500
Middle Village Law Office Map

Staten Island:
Connors and Sullivan, Attorneys at Law, PLLC
1250 Hylan Boulevard
Staten Island, NY 10305

Ph: 718-238-6500  
Staten Island Law Office Map

Contact Our Firm

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close
Legal Leaders Presents Martindale-Hubbell | Top Rated Lawyers 2015 | Featuring AV Preeminent | Martindale-Hubbell Lawyer Rating NAELA | National Academy of Elder Law Attorneys, Inc. | Member | Leading the way in Special Needs and Elder Law