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socrateaser
socrateaser, Lawyer
Category: Family Law
Satisfied Customers: 37959
Experience:  Retired (mostly)
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I currently have several revocable trusts and would like to

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I currently have several revocable trusts and would like to consider making them irrevocable.
I would like to be the trustee of such trusts even though I would be the grantor and beneficiary. I understand that this can be done but there may be implications
By doing this. Reason for doing this is to protect assets. No intent to avoid taxes.

What are the legal and tax implications should I go this route?
There are probably a thousand different ways to write a trust instrument to deal with certain tax and asset protection issues, but the principal result of declaring a trust irrevocable is to permanently deprive the grantor of all rights and authority in the trust property.

For practically the entire history of the Internal Revenue Code, the amount of assets that could be transfered by an inter-vivos (living) trust without incurring some immediate tax liability was severely limited. However, for the 2012 tax year, it is possible to transfer up to $5,000,000 via a trust without any gift tax liability. So, at the moment declaring a trust irrevocable may not have the same sort of adverse consequence that would typically dissuade a grantor from placing property into an irrevocable trust.

That said, there is another issue which may create a problem for a grantor seeking to protect assets from creditor attack. The Florida Uniform Fraudulent Transfer Act makes it possible for a creditor to force a trust to disgorge assets transferred within four years of the date that a creditor claim arises, if the transfer was originally made for less than "reasonably equivalent value" -- which basically means something in the neighborhood of fair market value.

So, if you are trying to avoid a specific creditor who already has a claim against you, then the irrevocable trust declaration may not produce the desired result.

Hope this helps.

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Customer: replied 4 years ago.
Have further questions/comments, but need time to get my writing organized to present as clearly as you replied to me.
I am at your service....

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