What You Need to Know About Financial Planning for Irrevocable Trusts

Tax law guidance on crucial points when planning a trust from Chicago law firm Hoogendoorn & Talbot LLP.
By: Hoogendoorn & Talbot LLP
 
CHICAGO - April 21, 2015 - PRLog -- As the 2015 tax season is closed, individuals are reminded of a major component to fiduciary asset management:  income tax planning.

Income tax planning for irrevocable trusts assesses whether it is more beneficial for a trust to pay income tax on various income items or to pass certain income or principal items to beneficiaries.

Christopher Floss, Associate at Hoogendoorn & Talbot LLP, a premier tax law firm in Chicago, regularly works with clients in need of fiduciary tax planning.  His expertise includes various levels of planning related to various types of trusts, including irrevocable trusts.  A major distinction between the different types of trusts is whether they are revocable or irrevocable.  Generally, a trust agreement is a fiduciary relationship that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries.

According to Floss, “in most cases it is better to pass as much income as possible to beneficiaries under an irrevocable trust.”  Because the ability to do so can be restricted by local law or by the terms of a trust instrument, extensive planning goes into determining the best approach.  The types of assets the trust owns are also taken into account, as well as the amount of income being generated and the income levels of the respective beneficiaries.

An irrevocable trust is generally preferred over a revocable trust if your primary objective is to reduce the amount of assets in your estate upon death.  Additionally, any income attributed to assets that are held in irrevocable trusts is taxed at the trust level, unless such income items are distributed to beneficiaries.  Finally, assets held in irrevocable trusts may also be protected against creditors and certain types of legal judgments.

The lawyers at Hoogendoorn & Talbot LLP are ready and able to provide the personalized tax planning that clients need for their unique circumstances.  Floss and the other tax law experts at the firm deliver service that clients deserve. (See https://medium.com/@Chris_Floss.)

Hoogendoorn & Talbot LLP, founded in 1985, is a law firm that focuses on representing families, business entities and charitable organizations. Each year, the firm and its partners donate a portion of their time, talent and revenue both to secular not-for-profit entities and faith-based organizations.

Media Contact
Christopher Floss
cfloss@hoogendoorntalbot.com
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Tags:Irrevocable Trusts, Revocable Trusts, Chicago Tax Lawyers, Estate Planning
Industry:Accounting, Legal
Location:Chicago - Illinois - United States
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Page Updated Last on: May 14, 2015
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