An irrevocable trust is a type of trust where its terms cannot be modified, amended or terminated without the permission of the grantor’s named beneficiary or beneficiaries. Irrevocable trusts cannot be modified after they are created, or at least they are very difficult to modify.
Do irrevocable trusts have successor trustees?
Generally, no. Most living or revocable trusts become irrevocable upon the death of the trust’s maker or makers. This means that the trust cannot be altered in any way once the successor trustee takes over management of it.
What are the powers of a trust trustee?
The trust may explicitly dictate how to do this, but, most of the time, trustees have fairly broad discretion to manage the assets as they see fit. For example, a trustee can buy and sell property, invest in certain stocks, and open or close bank accounts. However, a trustee must record and notify the beneficiaries of every management action taken.
Can a grantor serve as a trustee of an irrevocable trust?
An irrevocable trust is established while the grantor is living to save estate taxes (by removing assets from the grantor’s estate) and/or for asset protection or Medicaid (Medi-Cal in California) planning. While a grantor may technically be allowed to serve as the trustee of an irrevocable trust he creates, it is not a good idea at best.
What happens when a grantor names multiple trustees?
When a grantor names multiple trustees, or co-trustees, they are responsible for co-managing the trust’s assets. It is important to know what and how much power each co-trustee has over the management of the trust’s assets.
What happens if there is no independent trustee?
With no independent trustee: If there isn’t an independent trustee (and the trust is for the benefit of someone other than the grantor), the IRS has identified certain “magic words” that restrict the distribution of principal and keep the trust from being included in the beneficiary’s estate for estate tax purposes.
