Many West Virginians use revocable trusts, sometimes referred to as living trusts, as a means of transferring property upon one’s death without requiring beneficiaries to wait through the probate process. While this is a common estate planning goal, there are other objectives that might also be met through an irrevocable trust, particularly if you seek to pass along substantial assets to loved ones. 

While “irrevocable” generally means the grantor can’t unilaterally change the trust after funding it, West Virginia’s Uniform Trust Code provides limited avenues for modification. One potential way to do this is through consent of the grantor and all beneficiaries. An experienced estate planning attorney can review your specific circumstances and advise on the potential advantages and drawbacks of various types of irrevocable trusts, such as:

  • Spousal Lifetime Asset Trust (SLAT) — When a couple is concerned about incurring federal estate tax, a spouse with greater wealth can shift assets to a SLAT that names their partner as the beneficiary. This removes those assets from a potentially taxable estate. However, the trust needs to be drafted carefully, and if spouses own similar assets, it could be unwound based on the Reciprocal Trust Doctrine. 

  • Generation-Skipping Trust (GST) — A GST is designed to benefit future generations based on a federal tax exemption that applies to funds intended for a grantor’s grandchildren or others at least 37-and-a-half years younger. These can provide creditor protection and keep assets within the family, subject to applicable perpetuities rules and tax laws. 

  • Charitable Remainder Trust (CRT) — If you wish to fund a cause you believe in, a CRT allows you or your loved ones to have lifetime access to assets within the trust, with the remainder going to charity upon the final beneficiary’s death. Potential benefits include an upfront charitable deduction, deferral of capital gains on contributed appreciated assets, and income diversification.

  • Testamentary Trust — These legal instruments are established within a last will and testament and spring into existence upon the grantor’s death. Common examples include pet trusts for lifelong animal care, special needs trusts to provide financial support for disabled family members and trusts designed to preserve assets for descendants while offering protection against creditors or against assets leaving the family due to divorce.  

To reap the benefits of an irrevocable trust, it must be created with strict adherence to the applicable laws. A qualified attorney can advise on how the trust should be formed, potential consequences, alternatives that might provide additional flexibility and the designation of a suitable trustee. 

Pullin, Fowler, Flanagan, Brown & Poe prepares personalized, enforceable trusts, wills and other estate planning instruments. Our firm serves clients throughout West Virginia, Kentucky and Ohio. Please call 304-344-0100 or contact us online to discuss your particular situation and goals.