As we all age, there are certain risks (other than just health risks) that can present themselves. Risks to financial security can also arise due to mismanagement or even someone trying to take advantage of an aging loved one. Even if there is a revocable trust with the right accompanying estate planning documents in place, the risk that a loved one could be taken advantage of and taken to a different attorney to change the documents can be real.
One way to help combat this risk is to plan ahead before a diminished capacity situation occurs and consider establishing an irrevocable trust to hold title to assets such as real estate, bank accounts, investment accounts and other assets. An irrevocable trust is just like it sounds, it is “irrevocable” (not subject to being changed/amended) which is where the protection comes about. The key however is ensuring that an aging loved one who creates the irrevocable trust does so without undue influence and they have the requisite legal capacity to establish the trust. The aging loved one may even want to consider obtaining a Certificate of Independent Review by a secondary attorney.
With special provisions drafted in the trust, the trust assets can be treated as taxed back to the person creating the trust (the trust “Grantor”). This is important to preserve the income taxes generated by any of the assets to continue to be taxed back to the Grantor and also receive the step-up-in basis upon the Grantor’s death for the chosen trust beneficiaries.
If you or a loved one needs help exploring the options in establishing this special type of irrevocable trust, please contact our office at (760) 448-2220 or contact us on our contact page at https://www.geigerlawoffice.com/contact.cfm to schedule a consultation with one of our experienced attorneys.