Irrevocable Trust Attorneys

An irrevocable trust is a legal arrangement that transfers assets from an individual — the grantor — into an irrevocable trust, which holds the assets. The grantor then appoints a trustee to manage the assets for the benefit of the trust beneficiaries. The grantor immediately relinquishes control of the assets placed in the trust. The trustee manages the assets according to the terms of the trust for the beneficiaries. However, once created, the terms of the trust cannot be changed or altered unless the grantor and named beneficiaries all agree to do so.

An irrevocable trust can be created during the grantor’s life known as a living trust, or a testamentary trust can be established posthumously. At Crow Estate Planning & Probate, we create irrevocable living trusts.

Irrevocable Living Trust Requirements

While most individuals do not desire to give up control of their assets, significant tax advantages exist when creating an irrevocable trust. In most cases, the trustee — or the person or organization in charge of administering the trust — must manage and distribute the assets according to the agreement’s exact terms. The grantor cannot change the trust in any way, nor can any other party unless the change is ordered by the court or determined by all named beneficiaries.

The exact restrictions for irrevocable living trusts vary by state. Crow Estate Planning & Probate is proud to help clients in Kentucky and Tennessee navigate living trusts.

Irrevocable Living Trusts in Kentucky and Tennessee

Irrevocable trust laws in Kentucky and Tennessee are similar. Both draw inspiration from the Uniform Trust Code (UTC). Both states require the trustee and beneficiaries to adhere to the irrevocable trust without alteration. However, both states allow changes to an irrevocable trust in specific situations.

Altering or Terminating an Irrevocable Trust in Kentucky

Kentucky allows nonjudicial changes — or changes made without court approval — to any noncharitable irrevocable trust when the grantor and all beneficiaries agree to change or terminate the trust. The change may also occur with approval from the grantor’s power of attorney, conservator, or guardian.

A court ruling is necessary to change or terminate an irrevocable trust in Kentucky without the grantor’s approval. All beneficiaries must agree to the change or termination. The court must rule that a change is consistent with the material purpose or that the trust need not continue to achieve its material purpose.

Changes to a living trust can occur without the beneficiaries’ unanimous consent if the alteration includes protections for the dissenting beneficiaries.

Altering or Terminating an Irrevocable Trust in Tennessee

Tennessee laws also permit trustees and beneficiaries to change an irrevocable trust when they provide a written explanation disclosing the proposed changes to the grantor. The trustees and beneficiaries must give the grantor 60 days from the notice’s delivery to object.

Tennessee’s nonjudicial change requirements loosen after the grantor’s death. Termination or modification may occur when the trustee and all beneficiaries agree to a change that aligns with the material purpose. Beneficiaries may agree to termination without the trustee’s consent if the court verifies the change’s alignment with the material purpose.

Benefits of Irrevocable Trusts

Releasing ownership of various assets through an irrevocable living trust can provide numerous benefits for the grantor.

Moving assets from an individual’s estate into an irrevocable trust subtracts their value from the estate’s taxable amount. The transfer also lessens the income tax a grantor pays on the income their assets generate.

The irrevocable trust protects the assets from any creditor pursuing payment from the grantor or any beneficiary through a lawsuit.

The grantor and beneficiaries each benefit from consistent asset distribution that aligns with the grantor’s intent.

An irrevocable trust can distribute funds to a beneficiary with a disability in intervals and amounts that retain Medicaid and Supplemental Security Income (SSI) benefits.

Dangers of Irrevocable Trusts

An irrevocable trust may cause a lack of flexibility. The trustee must follow specific parameters, and beneficiaries must follow complex processes to change. The trust’s rigidity carries some risk for the grantor, who relinquishes ownership of the assets and the income they provide.

Hire an Irrevocable Trust Attorney

Establishing an irrevocable living trust and complying with relevant laws are complex processes. An irrevocable trust attorney can help grantors and beneficiaries maximize the benefits and mitigate the risks of any irrevocable trust agreement.

At Crow Estate Planning & Probate, we help families in Kentucky and Tennessee develop and carry out strategies for passing assets from generation to generation. Our experienced attorneys will develop an irrevocable trust plan tailored to your wishes. We invite you to contact us online to schedule a consultation with your local Crow Estate Planning & Probate branch.

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