For estate holders in Ohio, irrevocable trusts can produce major tax savings and various other benefits. However, it's important to remember that the terms of these trusts cannot be changed once they have been set.
An irrevocable trust is a form of permanent disposition of property. Once it is executed and the property transferred to the trust, it cannot be amended or revoked, even by the grantor. A revocable trust can be amended or cancelled, but it does not provide the same tax benefits or protection from the creditors of a beneficiary.
If property is placed in an irrevocable trust for someone else's benefit, any gain or appreciation in the assets will not be subject to estate tax; although the assets can reduce the grantor's unified estate and gift tax lifetime credit. This happens in cases where the property placed in trust is over $10,000 in value.
An irrevocable trust can be placed in a will and take effect only after the death of the grantor. A popular form of testamentary trust contains a spendthrift clause. This clause gives money to a beneficiary, but only under conditions set forth in the trust itself. The beneficiary may receive a certain amount per year, or it may be at the sole discretion of the trustee. If set up correctly, the creditors of the beneficiary cannot attach or seize the property left in trust.
There are a number of ways an irrevocable trust can be created. For example, some trusts can take effect immediately. Revocable trusts can be set up to become irrevocable at a certain time or at the death of the grantor. The options available are dependent on the needs and wants of the grantor. A consultation with an attorney could be helpful during the estate planning process.