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Fleming Financial Services Blog

At Fleming Financial Services, Inc., our role is to assist our clients in defining and realizing their financial objectives and goals. We work with our clients to implement personalized plans designed for their unique situations. Our areas of concentration are: Retirement planning, Estate and Wealth Transfer strategies, and Business Continuation planning. We emphasize the importance of conducting our business with integrity and professionalism. As a member of PartnersFinancial, an independent national financial services company, we are able to provide access to sophisticated resources for the benefit of our clients. Some of the professionals with our firm are currently registered to conduct business through NFP Securities, Inc. With those additional resources in place, we help facilitate the complex corporate and personal financial decisions our clients must make.

When Do You Need an Irrevocable Trust?

Thomas Joseph Thomas Joseph , 6/25/2015
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Fleming Financial Services, PA, Irrevocable TrustBecause irrevocable trusts cannot be changed once they have been established, many people are hesitant to include these trusts in their estate plans. However, in spite of the obvious drawbacks of creating a trust that cannot be modified or terminated, some situations still warrant their use. Tax Reduction One of the most notable benefits of irrevocable trusts is tax reduction. The assets held in an irrevocable trust are not part of your taxable estate, so they can reduce estate taxes after you die. Irrevocable trusts can also reduce personal income taxes. However, the trust itself must still pay tax on any income it earns, and the tax brackets for trusts are less generous than those imposed on an individual's income. Thus, this tax-saving strategy is appropriate only when the income earned by the trust is low enough to prevent it from incurring a higher tax rate than you would pay if it were included in your annual income. Medicaid/VA Benefit Planning When drafted and funded properly, an irrevocable trust can be used to maximize your eligibility for Medicaid or VA benefits by allowing you to exclude the assets owned by the trust from your countable resources. However, keep in mind that Medicaid will count any transfers made to the trust against you for five years. This waiting period does not apply to VA benefits. Protection from Creditors and Liens Because the grantor is no longer the legal owner of property transferred to an irrevocable trust, all property contained in the trust is safe from the claims of creditors. Thus, irrevocable trusts are a wise choice for individuals who want to protect their assets from such claims. Irrevocable trusts can also be used to keep property safe in the event of a lawsuit against the grantor. Asset/Income Preservation Irrevocable trusts are ideal for protecting property and/or income you wish to give to a person who either cannot manage the assets on his or her own or is disabled. When drafted appropriately, an irrevocable trust can provide a reliable source of income for a beneficiary without allowing the beneficiary direct access to the contents of the trust or affecting the beneficiary's eligibility for government assistance. Content provided by Transformer Marketing.