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Regular Irrevocable Trust

A regular irrevocable trust is a non-charitable gift plan defined by federal tax law that allows an individual to transfer assets to family members at reduced tax cost.

The donor irrevocably transfers assets, usually cash or securities, to a trustee of her choice, such as a bank trust department. The amount transferred into the trust is treated as a taxable gift from the donor to the beneficiaries of the trust. During the trust's term, the trustee invests the trust's assets. The trust's term is set by the donor.

When the trust term ends, the trust distributes all of its accumulated assets to family members or other beneficiaries named by the donor.  The donor may add funds to her trust whenever she likes.

The regular irrevocable trust is a simple and popular estate planning tool. Any asset growth that occurs within the trust escapes transfer taxation: the initial taxable gift is based on the funding amount of the trust and once in the trust, the assets are out of the donor's estate and therefore not subject to estate tax.

If you own our Planned Giving Manager software, you can illustrate the benefits of a regular irrevocable trust in (Program 4) Lead Trust Projections.

  1. Select Lead Trust Projections
  2. Open the Gift Options window
  3. Choose Regular Irrevocable Trust as a gift option

 

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