An irrevocable trust, as its name implies, means that you cannot amend, change, or alter the terms of the trust. The trust becomes a legal entity unto itself and, in that sense, has certain rights. People commonly use irrevocable trusts to make large gifts to children, grandchildren, and even great-grandchildren without creating any liability for estate taxes.
The tax law permits giving any one individual (or any one irrevocable trust) $10,000 per person per year without that individual having to pay taxes on the gift. When you die, the death benefit from an irrevocable trust goes directly to the trust, also with no tax liability. Because your spouse pays no estate tax on funds that go to him or her, you need to set up an irrevocable trust only for your children and/or grandchildren.
The tax law permits giving any one individual (or any one irrevocable trust) $10,000 per person per year without that individual having to pay taxes on the gift. When you die, the death benefit from an irrevocable trust goes directly to the trust, also with no tax liability. Because your spouse pays no estate tax on funds that go to him or her, you need to set up an irrevocable trust only for your children and/or grandchildren.
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