Irrevocable Life Insurance Trust

Posted on July 10, 2018

Article written by Jonathan B. Osler, Esq.

In the dark times of low estate tax exemptions, resourceful estate planners devised a number of clever methods to reduce or eliminate the estate tax exposure of their clients.  One such method, the irrevocable life insurance trust (or “ILIT,” pronounced like “eye-lit”), became an extremely popular way to soften the tax blow on beneficiaries of taxable estates.  Although ILITs once were a dime-a-dozen, their use has declined with the rising estate tax exemptions.  That said, many clients who created ILITs years ago continue to pay hefty annual premiums on the insurance policy held by the trust.  For those clients especially, it is important to understand the ILIT’s function, and to seek professional counsel to determine whether or not the ILIT’s costs outweigh its benefits in the current tax environment.

So, what is an irrevocable life insurance trust?  As the name suggests, the ILIT is a type of trust generally designed to hold life insurance. For the ILIT to work as intended, it must meet several requirements.  For example, the insurance policy must be held in an irrevocable trust (hence the name), meaning the terms cannot be changed once the trust is established.  Further, the grantor of the trust cannot serve as the trustee—the grantor’s spouse, friend, children, professional fiduciary, or some other third party must serve as the trustee.  If structured properly, the IRS will not include the value of the insurance policy in the ILIT as part of the grantor’s gross estate, and the trust’s beneficiaries will not pay any estate tax on the proceeds.  Consequently, the beneficiaries of the ILIT can use the tax-free insurance proceeds to offset the amount owed to the IRS in estate taxes.  In essence, the ILIT is a hedge against risk—one designed to reduce beneficiaries’ overall exposure to the estate tax.

Simple in theory and complicated in practice, the ILIT requires ongoing involvement on the part of the grantor, trustee, and beneficiaries.  For example, the grantor must jump through complex administrative hurdles simply to pay the premiums on the life insurance policy.  To accomplish this, the grantor gifts to the ILIT up to the annual exclusion amount ($15,000 in 2018) per beneficiary to cover the yearly premiums.  The trustee must then send something called a “Crummey letter” each year informing the beneficiaries of a specified window, usually 30 days, during which they technically have the right to withdraw the grantor’s gift to the ILIT.  The idea is that the beneficiary will leave the money in the trust, where it’s used to pay the insurance premiums; however, for the IRS to deem the gift to the ILIT tax-free, the trustee must notify the beneficiary of his or her right to withdraw the gift within the IRS-approved timeframe.  Again, although the expectation is that no beneficiary will withdraw the gift—after all, it’s in the beneficiary’s best interest that the premiums get paid—the trustee must send the Crummey letters each year, and document that the proper procedural formalities have been followed.   If the procedures above are not repeated each year and not properly documented, the IRS may include the value of the life insurance policy in the grantor’s estate, which defeats the purpose of the ILIT.  On the other hand, the upside to this arrangement is that because the grantor (indirectly) pays the premiums on the policy, there is an annual flow of cash out of the grantor’s estate; this helps to reduce the value of the estate or to slow its growth, thereby reducing estate tax liability in the long run.

You, the reader, may well have an ILIT and are wondering whether you should keep it.  Well, the answer to that question is complicated.  Your ILIT may have been an absolute necessity in the 1990s, when the estate tax exemption hovered at $600,000 for most of the decade.  But with estate tax exemptions per person exceeding $5,490,000 in 2017, and $11,200,000 in 2018, your ILIT probably seems like an anachronism—a relic of the past—and that may well be true.  However, whether you should keep your ILIT depends on a host of variables, including the current and expected value of your estate, your exposure to various personal and professional liabilities, and other considerations beyond the scope of this article.  But most importantly, we must plan for the possibility of a future reduction in the estate tax exemption; currently, the estate tax exemption will revert back to pre-2018 levels (inflation adjusted) in 2025, barring congressional action.  Thus, an ILIT that seems unnecessary today may be an invaluable part of your estate plan in just a few years.  Therefore, if you have an ILIT, you should take a moment to meet with an experienced estate planning attorney to review your current circumstances.  That will help you determine whether the ILIT remains an integral part of your comprehensive Estate Plan—one worth jumping through the hoops to maintain—or if the best long-term strategy involves terminating the ILIT.

If you have an ILIT you would like reviewed, or if you are interested in creating an ILIT, please contact our offices—we would be delighted to schedule you for a complimentary, one-on-one consultation to review your estate planning documents.   Additionally, if you are interested in learning more about estate planning in light of the recent changes to state and federal laws, please join us at one of our seminars.

Posted in Estate Planning

The Virginia Business Trust

Posted on June 19, 2018

Article written by Bennie A. Wall, Esq.

The Virginia business trust is the newest choice of business entity available in Virginia. This article will explore this specific business entity and outline some of its major perks over the ever familiar limited liability company, which is why we are confident that the Virginia business trust will grow in popularity as Virginia’s business entity of choice for real estate investors, rental property owners, and some business owners.
Although Virginia business trusts have been an option for clients since 2002, very few professionals and even fewer individuals have ever heard of this business entity. While reading, you may notice that the Virginia business trust is akin to the Virginia limited liability company (“LLC”); however, a few details may reveal it to be a much more suitable alternative than the standard subsidiary LLC scheme.
Let’s start with the basics:

1. What is a Virginia business trust?
A Virginia business trust is an unincorporated business entity. The Virginia business trust is governed by the Virginia Business Trust Act as codified in Title 13.1 of the Code of Virginia. The business trust is similar to other types of unincorporated business entities, yet offers some unique attributes that are beneficial to many clients.

2. How does a Virginia business trust work?
The Virginia business trust operates like a typical trust. Assets are given by a Grantor to a Trustee. The Trustee agrees to accept the assets and manage them as directed by a private contract known as the trust agreement. The trust agreement will direct the Trustee on how to hold and manage the assets and any income created by the assets. The trust agreement will also establish the relationship between the Trustee and the beneficiaries of the trust by explaining under what conditions the Trustee may distribute trust assets to the beneficiaries or for the beneficiaries’ benefit.

The main difference between the Virginia business trust and a standard trust is that the business trust is a recognized business entity and must be registered with the State Corporation Commission (SCC). Registration is a relatively easy process. Similar to an LLC’s Articles of Organization, the applicant only needs to file Articles of Trust (Form BTA-1212). The Articles of Trust is usually a one-page form that asks for specific information about the Trust: the name of the business trust, the registered agent, and the address. There is a $100 initial filing fee and a $50 annual registration fee thereafter.

Other than these few requirements, the inner workings of the business trust are extremely flexible (similar to the Operating Agreement of an LLC). Within the trust agreement you can set standards for the business’s operations, establish limited liability, provide for succession of management and ownership, and name the business.

Keep in mind, however, that when it comes to drafting the Virginia business trust agreement, the devil is in the details. For instance: the Code requires that a trust agreement contain specific language to establish series limited liability asset protection. More on this benefit below. Another consideration is when naming a Virginia business trust it is imperative that you follow naming conventions established in the Code. If the chosen name violates the established naming conditions, then the SCC will deny your client’s registration. For example, when naming a Virginia business trust, the name cannot state or imply that the trust is a corporation, LLC, or limited partnership. Moreover, a drafter must be careful in his use of the word “trust.” The SCC will approve a name like: “RVA Rentals, a Virginia business trust,” but it will likely deny “RVA Rentals Business Trust.”

3. How is the business trust taxed?
A Virginia business trust has the same taxation options as an LLC; an S Corp, a Partnership, or a Disregarded Entity. Additionally, unlike with multiple LLCs, the business trust will have only one return and one tax identification number regardless of the number of series.

4. What is the value of Virginia business trust?
The Virginia business trust is a valuable planning tool for individuals who want asset protection while maintaining flexibility with minimal administrative costs.

The Virginia Business Trust can Provide Limited Liability and Asset Protection

Because the business property is titled to the Trustee of the business trust and not to the beneficiary (also known as the beneficial owner), the beneficial owner is separate and apart from the trust. Thus, the liability of the business trust does not extend to the personal assets of the beneficial owner and the debts of the beneficial owner do not extend beyond what the trust distributes to the beneficial owner (e.g. mandatory distributions). This level of protection is comparable to that of a shareholder of a Virginia Corporation.
Additionally, the Virginia business trust offers the business owner the ability to acquire series limited liability, which allows the Trust to compartmentalize assets and liability. Under one business trust you can have multiple series that each can hold individual assets (like real property), have its own management structure (Mom and Stepdad manage one series, while Mom and Son manage the other series), have its own succession structure (All of Series A passes to Stepdad; Series B and C pass to Son), and its own liability (injury on property in Series A cannot be attached to properties in Series B, C, D, or E).
This limited liability structure may sound familiar to you. You may have your own business plan (or know someone who does) that incorporates multiple LLCs to accomplish the same end. As anyone with property in the multiple LLC series structure can attest, this creates quite the administrative burden on the owner. As you will see below, the series structure of the Virginia business trust, however, simplifies this administrative nightmare.

The Virginia Business Trust Cuts Administrative Hassle and Saves on Administrative Fees

The Virginia business trust with a series structure provides similar limited liability benefits as owning multiple LLCs, but often at a fraction of the cost.

The limited liability company is a great tool for small businesses. The business files its Articles of Organization with the State Corporation Commission and pays an initial fee of $100. Then, it simply pays an annual registration fee of $50 to keep the business running. Not too much of a hassle when you have only one or two LLCs to manage, but things can be more complicated for those who own a network of LLCs for asset protection purposes.

Consider a family who own 10 rental properties together. The traditional model for maximum protection is to place each property within its own individual LLC and then to have those LLCs owned by another LLC. That is 11 LLCs. Each costs $100 to register with the SCC ($1,100). Each must pay a $50 annual registration fee to the SCC ($550/year). These costs can add up over a lifetime—especially once you take into consideration the costs of separate accounting and tax preparation and filings for each entity.
Following the same example, a family with 10 rental properties can establish one business trust with 10 separate series. Since the SCC regards this as one entity and not 10 separate entities, one would only have to register the business trust for $100 and then pay a $50 annual registration fee to the SCC. That saves $1,000 in formation costs and $500 a year in registration fees alone. Even better, there may be additional savings on tax filings and preparation. With a properly drafted Virginia business trust all of these savings can be accomplished while maintaining the flexibility and limited liability provided by the traditional multiple LLC structure.

Virginia’s latest business entity offers some major perks over its predecessors. If you are looking to simplify your business structure or to start a new business plan, we encourage you to speak with an experienced attorney.
As always, we are happy to meet with you to explain the estate planning / asset protections options that are available for your business.

NOTE: You do not have to use the SCC’s form Articles of Trust. You simply must submit a filing that is compliant with §13.1-1202 Code of Virginia. For maximum asset protection you will want to have your own Articles of Trust drafted by an experienced attorney.

Posted in Business Succession Planning, Estate Planning

The Choice of Business Entities in Virginia

Posted on June 7, 2018

Article modified and edited by Bennie A. Wall, Esq.

So you are starting a new business and wondering: What choice of business entity is right for me? How do I choose among the Virginia business entities? Which business entity will best suit my needs?

You may have heard a lot about the benefits LLCs (Limited Liability Companies), C Corporations, and S Corporations. You may have even heard the perils of sole proprietorships and general partnerships. When choosing which Virginia business entity is right for your business, knowledge is power. So, we have provided you a general outline of the many choices of business entities in Virginia.

The Sole Proprietorship

A sole proprietorship is a business entity which has no separate existence from its owner.  Any person who does business alone is a sole proprietor by default. In a sole proprietorship, the owner is personally liable for all debts of the business. In short, a sole proprietorship is an “easy” business entity that offers no liability or asset protection for the owner and has no defined structure. If you are interested in protecting you and your family’s personal wealth, home, and other assets from your business venture, then perhaps this is not the best Virginia business entity for you.

The Partnership

A partnership is a business entity in which partners share with each other the profits or losses of the business. If two or more people engage in a business they are a partnership by default. Absent an agreement, the partners share profit and loss equally. Such an equal division of rights and liabilities is called a general partnership. By default, every partnership begins as a general partnership. Like sole proprietors, general partners are personally liable for all debts of the business.  A partnership agreement can determine how the partnership is managed, the allocation of profits and losses and the liabilities of the individual partners to each other and to the business. Keep in mind, however, that each partner is jointly and severally liable for the obligations of the business. Thus, a creditor can seek full satisfaction from either partner attacking his personal wealth just as a sole proprietor. But wait! We just told you that by default business owners in a partnership share losses equally, how can a creditor go after just one of us? Great question: If a creditor satisfies their debt by going after one partner, the aggrieved partner can then bring suit against his other business partner(s) for them to pay up their fair share. The only problem is the added cost and headache of litigation. If you must choose this route, please have a well drafted partnership agreement made by an experienced attorney. Again, if it is asset protection you are interested in, this may not be the best option for you.

The Virginia Limited Partnership

A limited partnership is a type of partnership which is organized into two classes of partners: general partners and limited partners. General partners manage the business and are personally liable for all debts of the business. Limited partners may own part of the business but they do not manage the business. The limited partners’ responsibility to pay business debts is limited to their investment in the business. This limited liability means that if the business goes bankrupt, all the business assets may be lost but the personal assets of the limited partners are protected from creditors of the partnership  The general partners enjoy no such immunity and remain “on the hook” for business liabilities. Therefore, business owners will find it easier to find investors if the business is a limited partnership.

The Virginia Corporation

A corporation is a business entity that has an existence separate from its owners.  Corporations have 3 Major Benefits over partnerships:

  • While a general partner would be personally liable for business debts, every shareholder’s liability is limited to his or her investment in the company. That is to say, all of the shareholder’s other assets are protected.
  • The corporation can continue in perpetuity ensuring everything you have worked so hard building can continue as your legacy even once you retire or pass on.
  • Shares of a corporation are easier to transfer than other business interests.

If Virginia Corporations are so great, then why doesn’t everyone have them? Many do not know it is an option. Others believe that it is too much red tape. In Virginia, Corporations must be created in a legal document and must be registered with a State Corporation Commission to legally conduct business in the Commonwealth.

If you want powerful asset protection and a company’s investors are comfortable investing with and a little paperwork does not scare you, then a Virginia Corporation may be a great choice for your business venture. The next question is, which type of Virginia Corporation will you choose?

There are two main forms of corporations: C Corporations and S Corporations.

Difference between C Corps and S Corps

C Corporations are more commonly used for publicly traded or growing companies because there are no limits as to who may own stock. C corporation stock is the easiest business interest to sell; publicly traded companies are typically C corporations. Unlike S Corps, C Corporations can have different classes of stock to suit the needs of the directors and investors. The disadvantage of C Corporations is that they pay double taxation: they pay tax on corporate earnings first and then shareholders pay income tax on dividends upon receipt.

S Corporations are taxed like partnerships (to the shareholders). This is good for companies with high earnings but whose value is unlikely to increase. Some accountants use S Corporations to treat some income as a dividend to shelter income from self-employment taxes for contractors. S Corporations have limitations: They are limited to one class of stock, there can be no more than one hundred shareholders, and all shareholders must be United Stated citizens or US residents and must be personal (and not entity) taxpayers.

At this point you may be thinking:

I really like the protection the Corporation provides me, but all this legal and tax talk has my head spinning—it sounds like an administrative nightmare.

Perhaps you a doubting whether either of these types of Virginia Corporations are right for you at the present time. Yet, at the same time, you are intrigued at the possibility of asset protection from your business. Well, then you may want to read on to learn more about another great choice of Virginia business entity: The Virginia Limited Liability Company.

The Virginia Limited Liability Company

The Limited Liability Company (LLC) is a business entity which shares both the liability benefits of a corporation with the beneficial tax treatment and structural flexibility of a partnership. In many ways, an LLC is like a corporation. Both LLCs and corporations are business entities that enjoy limited liability for owners, have their own separate existence, and can continue in perpetuity. Like corporations, LLCs must be registered with a state to conduct business there. Owners of an LLC are typically called “members” instead of a corporation’s “shareholders.” Like a C Corporation, an LLC can have multiple classes of membership (stock).

LLCs are more flexible and less burdensome than corporations. An LLC can choose to be taxed as a sole proprietor, a partnership or a C-Corporation.  An LLC in Virginia can have only one member or it can have many. Like a partnership, an LLC can operate without a written agreement but to do so would be risky and not advisable.

LLCs share the major benefits of corporations and are easier to create and manage. As a result, LLCs have becoming the choice of entity for businesses ranging from personal contractors to service and sales companies.

I know what you are probably thinking at this point: Nailed it! I get a corporate shield over my personal assets, but with the ease of a partnership. Sign me up. Not so fast. While the LLC has been the business entity of choice for most Virginia business owners, there is a relatively new kid on the block: The Virginia Business Trust.

The Virginia Business Trust

A Business Trust is the newest form of business entity offered in Virginia and is quickly becoming the entity-of-choice for holding and managing rental real estate, particularly where there are several properties. It has all of the benefits of LLCs, plus several additional benefits and advantages.

A Business Trust is an association of beneficial owners formed under the laws of the Commonwealth and registered with the Virginia State Corporation Commission, in which a Trustee or Trustees (a fiduciary who acts on behalf of the beneficial owners or beneficiaries) directs the business operations (similar to the Officers of a Corporation – i.e. president, vice-president, secretary and treasurer or the Manager of a Limited Liability Company). A Business Trust, like Corporations and LLCs, does not terminate upon the death or dissociation of a beneficial owner. Further, the Trust may incorporate a governing document called a “Trust Agreement,” which is akin to the Bylaws of a Corporation or an Operating Agreement of an LLC. And, very importantly, the beneficial owners of the Trust can have limited exposure to liability and can transfer shares during their lifetime or upon death in accordance with the beneficial owner’s estate plan.

A very useful feature, which sets it apart from other types of business entities, is that a Business Trust may be structured to hold different income producing properties, the income of which may go to different beneficiaries in multiple “Series.” Each Series may designate a separate set of trustees, beneficial owners, or beneficial interests having separate rights, powers, or duties with respect to specified property or obligations of the Business Trust. Further, profits and losses associated with any Series may have a separate business purpose or investment objective.

A single Business Trust is superior to forming multiple Limited Liability Companies (LLCs) or Corporations for the following reasons:

  1. Ease of administration: Since a single Business Trust can provide limited liability protection for each Series within it, forming a separate company for each asset is not necessary; the result, one entity instead of many;
  2. Limitation of liability: Each individual Series established under a Business Trust enjoys liability protection separate and apart from any other Series;
  3. Flexibility of management: Each Series can have a different management structure and ownership allocation, thus allowing each beneficial owner to exercise control over a Series;
  4. Easy transferability of ownership: Each beneficial owner of a Series can direct his/her beneficial interest in a Series to his or her heirs;
  5. Flexibility in the division of income and expenses: Income and expenses can be allocated to each individual Series;
  6. Effective transition of management: Upon the incapacity or death of a beneficial owner, a Business Trust can provide for successor trustees to manage the business;
  7. Variety of taxation choices: Similar to an LLC, a Business Trust can choose to be taxed as a disregarded entity, a partnership or an S-Corporation. Like an LLC, a Business Trust can have only one member or it can have many; and
  8. Business Structure can be Simple or Complex: Like a partnership and an LLC, a Business Trust can operate without a written agreement, but to do so would be risky and not advisable.


I hope this gets you on the right path for selecting a Virginia business entity. As you have seen, Virginia has many options when choosing the best business entity, so determining which of the many business entity options is right for your business takes a careful consideration of the nature and size of your business as well as your business’ goals and objectives. It is always imperative that you explore these options with an experienced attorney as well as your business’ tax advisor.

Want to learn more about these different business entities, or help determining which entity best suits your needs? Then take a look around our free resource center or call today and schedule an appointment with one of our experienced attorneys.

Posted in Estate Planning

The Last Will and Testament

Posted on May 14, 2018







Article written by Eldridge Blanton, Esq.

Wills are legal instruments used to transfer property upon one’s death. The person who creates the Will is referred to as the testator (fem. testatrix), one who makes a testament.

The person (or entity) who carries out the terms of the Will is the executor (fem. executrix), one who executes the Will.

There are numerous ways to transfer property without using a Will. For example, a joint bank account will transfer to the other person on the account when one of them dies. In like manner, a joint stock account will transfer to the other co-owner, although brokerage firms will usually insert the word “survivor” to clearly indicate that the account goes to the survivor upon the first death. Retirement accounts (IRAs, 401(k)s, etc.) will have a beneficiary, as will life insurance policies. In all of these examples, the joint ownership or beneficiary designation will trump the provisions of the Will.

If property does pass via one’s Will, that means that the local probate court will be involved. The clerk of the court will inspect the Will for proper witness signatures, notary stamps and anything that might appear irregular. If the Will passes muster with the court, the next step is usually to the Commissioner of Accounts, a lawyer appointed by the court, who will supervise the process to ensure that all creditors are paid and that the Will provisions are carried out. Some estates (those under $50,0000) will fall under the “Virginia Small Estate Act” and the process will be significantly shortened.

A Will does nothing while the testator is alive. A Will “speaks” at death.  If the testator becomes incapacitated, he/she will have to rely on a power of attorney for financial decisions and a Virginia advance medical directive for healthcare matters. In the absence of these documents, a family member will have to petition the court for appointment as guardian for health related matters and conservator for financial ones. This is sometimes referred to as “living probate” because the court will be involved for the rest of the person’s life (or for the remainder of the person’s incapacity).

In recent years, living trusts have come into widespread use as a “Will substitute.” Living trusts can hold title to property and can pass the property to family members without the intervention of the probate court. It’s a private process whereas Wills are public records. Whether one uses a Will, a living trust or any of the other methods, it’s VERY IMPORTANT to affirmatively document your wishes and not leave your family to sort out your affairs after your death.

Posted in Estate Planning

Does your Estate Plan Need Remodeling?

Posted on April 30, 2018


Content provided by WealthCounsel.

Article written by James W. Garrett, Esq.

Estate Plans, like houses, need updating and remodeling from time-to-time. If you haven’t reviewed your Estate Plan in the last five years, you probably should. Congress recently passed two major tax laws that impact estate planning: the American Taxpayer Relief Act of 2012 (“ATRA”) and the Tax Cuts and Jobs Act of 2017.

If you are married and haven’t updated your Estate Plan since the passing of ATRA, your will or trust likely includes an “A/B trust” tax plan designed to minimize estate taxes. Since the 2017 Tax Cuts and Jobs Act raised the estate tax exemption to $11.2 million in 2018 ($22.4 million for a couple), the “A/B trust” tax plan adds unneeded complexity and may result in your children paying higher capital gains taxes. In many instances this tax planning ought to be removed.

If you have substantial retirement plan assets, you need to consider the taxation issues related to passing on these assets to your children and grandchildren. Further, you need to be aware of the impact of the 2014 ruling in Clark v. Ramaker where the U.S. Supreme Court ruled that inherited IRAs are not asset-protected from your children’s creditors. Fortunately, with proper planning, retirement assets can be passed down in trusts for asset-protection purposes, without foregoing your children’s or grandchildren’s ability to stretch-out distributions over each beneficiary’s life expectancy.

Aside from tax issues, if you have experienced some combination of changes involving your family, your health or your wealth, your Estate Plan is probably out-of-date because it no longer reflects your situation and goals. You should have your Estate Plan reviewed if you have experienced any of the following:

  1. Changes in your family structure, such as divorce, remarriage, birth of a new child or grandchild. If you are married and have children from a previous relationship, you need to update your plan to balance your desire to provide for your spouse, while insuring that your children do not get disinherited. And, if you desire to name an underage grandchild as a beneficiary of your life insurance policy or IRA, you need to understand the problems that will arise when a minor child inherits without proper planning in place.
  2. Changes in your risk profile. If you own rental property in your own name, you need to understand the legal risks. Since personal ownership subjects you to legal liability, you ought to consider establishing a business entity, perhaps a Limited Liability Company or Virginia Business Trust for asset-protection benefits and other management considerations.
  3. Changes in the risk profile of your children. When you did your plan several years ago, your son was a successful business owner and you left his inheritance to him outright. Now, as a result of poor business decisions and uncontrolled spending by his wife, your son has accrued much debt. If you were to die today, your son’s creditors could seize the inheritance you left to him. In such circumstances, you should consider changing your estate plan to protect your son’s inheritance by leaving it to him in a trust with an independent trustee.
  4. Changes to give your adult responsible child asset protection. Historically, most parents would leave an adult responsible child an inheritance outright. Today, many parents – after learning about the asset-protection benefits and family-line protections of a trust – leave that same child an inheritance in a lifetime, beneficiary-controlled trust.

Many old irrevocable trusts need updating too

Many irrevocable trusts need updating and remodeling, too. Old trusts can be hard to work with on a variety of levels. Remodeling these old trusts, consolidating them, or otherwise modifying them to make administration easier saves costs.

A common misunderstanding is that irrevocable means unmodifiable. Did you know that the Virginia Uniform Trust Code provides many ways for an irrevocable trust to be modified without court involvement?

Are you the beneficiary of an irrevocable trust established by a deceased spouse, parent or other family member? If so, the old trust may need updating to minimize capital gains taxation.

Are you the beneficiary of an irrevocable trust trusteed by a bank? Are you dealing with an out-of-state call center? Would you would prefer that you own financial advisor handle the trust’s investments? If so, you need to know that in many instances, a bank trustee can be removed and replaced with an administrative trustee, allowing your financial advisor to manage and invest the funds. (Note: Our law firm established Legacy Fiduciary Services, PLC to serve as trustee in such instances.)

As mentioned earlier, even if a trust is irrevocable, it is often possible to change it without court involvement, provided the change does not violate a “material purpose” of the trust. The exact mechanics will always vary depending on the trust and your situation, but it’s almost always possible to make some improvements.

If your estate plan is more than five years old or if you are the beneficiary of an old irrevocable trust, we’d love to explore whether a remodel is in order. Give us a call today and achieve the peace of mind knowing that your plan will address all of your concerns and goals.

Posted in Estate Planning