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FAQs – UNWINDING OBSOLETE PLANNING

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What is an irrevocable trust?

An irrevocable trust is a trust that, by its terms, cannot be revoked by the settlor, who is the person who set up the trust. Sometimes trusts are irrevocable from their inception. These trusts are commonly used for certain estate tax and asset protection strategies. Other trusts become irrevocable because of the death of the settlor.

Can irrevocable trusts be changed?

Yes, although not as easily as revocable trusts. It may seem counterintuitive, but irrevocable trusts can be changed. Numerous legal strategies exist to modernize irrevocable trusts. You can utilize techniques such as decanting, having a trust protector restate a trust (so long as it is allowed per the original trust), asking for a judicial modification, or having all interested parties execute a non-judicial settlement. The mechanics of each of these processes can be somewhat involved and varies depending on what your trust says now.  However, some changes are not possible. If you have set up an irrevocable trust or are the beneficiary of a deceased loved one’s irrevocable trust, it’s always worth exploring whether modernizing the trust can improve your tax and asset protection situation.

What is an FLP or FLLC?

A family limited partnership (FLP) or family limited liability company (FLLC)) is an entity used in estate planning to organize, gift, and protect assets for the benefit of family members, as well as reduce transfer taxes.

What is an LLC?

A limited liability company (LLC) is an entity commonly used in estate planning for asset protection purposes.  An LLC can be used to own and operate a business with relatively easy set-up, operation, and taxation. The LLC is favored due to its two levels of asset protection: protection of LLC assets from outside creditors and protection of outside assets from internal LLC liabilities.[/vc_column_text][vc_column_text]

Trust attorney Schoemakers to help you determine the best way to manage your estate. Call now to schedule an appointment with an estate planning lawyer in League City, TX.

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