Anybody ever done an irrevocable trust?

Question

So I'm considering retaining an attorney to create a Wyoming Irrevocable Trust to protect some of my assets.

My rental properties are mortgaged so I can't put them in there, but I want to put money in an account in the trust.

How do I avoid having the attorney's steal the money? Do they have access to the account or is the account only controlled by me? I would think that items in a trust are controlled by the attorney at my behest, so they would have access to the money....

Darius Ogloza · Answer

By all means, take Brian Boyd's good advice and seek legal counsel.  An irrevocable trust is IRREVOCABLE.  You cannot get your assets back if you change your mind or your life circumstances change.  It's usually a good idea to consider this structure if your assets exceed the limit for imposing estate taxes, which is really high these days.

Jack B. · Answer

Educate yourself....some attorneys have been charged with stealing well over 100 million in real estate transactions related to 1031 exchanges alone....https://www.justice.gov/opa/pr...

And it's rather common for attorneys to steal trust assets. https://rmolawyers.com/family-...Ignorance will result in your money being lost if you think all attorneys are to be trusted. Show a little more sophistication.

Brian Boyd · Answer

The attorney doesn't control the money. The trustee controls the money.

You do not control anything about the trust if it is irrevocable.

Given your questions, I think you should go meet with an attorney to get a better understanding of what lawyers do.

Christopher Smith · Answer

You're dealing with an attorney who you are worried might "steal the money", very interesting relationship

Jerry W. · Answer

@Jack B. you seem more intent on being rude to people and trying to show off what you know than in learning things bud.  You really need to be aware that an Irrevocable trust normally means that you lose ALL control over it.  If you can make decisions about the trust you can render it useless.  You really do lose control, not kind of, not maybe, you lose control.  Next you can simply use an institution to control the trust, like a bank or trust company.  You can make sure they are bonded well above the amount you put in trust.  Many Trust companies and banks have millions of dollars of bonds that insure against theft or embezzlement.  They are common.

The big thing is that you have not given any compelling reason yet to create an Irrevocable trust.  Normally inter vivos trusts do not provide protection from law suits.  Irrevocable trusts do because you cannot compel how the trust money is spent so they cannot compel you to use the money to pay them.  If you retain the right to use the interest from investments, they can compel you to pay the interest to you.  There are very good reasons to use Irrevocable trusts, but I have not heard you mention a single one of them yet.  What you propose is kind of like locking all of your money in a vault, having it sealed, then hiding it.  No one will ever take that money from you, but you never get to enjoy it.  Every time the trust happens to give you money a debt collector can garnish it.  Unless you have children and a net worth of over 15 million currently I cannot imagine a reason to go with an Irrevocable trust.  Even if you have those items there a lot of other ways to do it that I would suggest first.  I had a friend or two who did an Irrevocable trust, but I never really understood all of it.  A lot of the purpose had to do with inheritance tax rates of 70%, a family ranch that was appreciating in value, and hoping to keep a legacy for their kids and grandkids.  The trust locked in the inheritance tax value at the time creation, and allowed the Grantor to go on living and investing, but he knew that 70% of everything he had left was going to be taxed at 70%.  Funny thing, they increased the inheritance tax exemption buy about 14 million years after he had done this, so he gave up complete control the thing he loved for no reason after the laws changed.  Now if you have a strong family history of dementia at age 40, and you are 30 and have one or more special needs kids, and want to make sure that neither you or anyone else can squander their money.  Put a few million into an Irrevocable trust, have a bank or trust company run it, have them post a bond every year, have an outside accounting firm audit it every year, have it make annual reports to the court, and set up a list of people you trust be able to audit it at will.  If you have any interest in investing in real estate forget the irrevocable trust.  You will not be able to do it.

Alexander Szikla · Answer

Seems like an LLC is your best bet for now.

LLCs have a privacy aspect and protect from legal liability. They are a very cheap form of insurance! However, if you are concerned about a divorce, you might want to look into revocable trusts.

You want to make sure any potential liability stays insulted to the property "in question" and not spread putting everything else at risk. Meaning, every property should have its own LLC. Very important that you should not commingle personal and business expenses nor cross expenses through various LLCs. Keep everything separate in order to maintain the integrity and legal protections afforded by an LLC. I would also suggest starting a Management Co. LLC to separate a bit further and also provide the convenience of running all financials through one entity as a manager which is okay.

As far as the benefits of estate taxes go, the limits vary by state but you can keep the lion's share outside of a trust and just transfer the minimum into the trust to bring your taxable estate just below the threshold.

Brian Boyd · Answer

You do you. Best of Luck to you and I hope you find the answers you are seeking.

No good deed......

Lynnette E. · Answer

I have spent decades using Trusts.  I personally would NEVER do an Irrevocable Trust.  I would only do a Revocable Trust.

Irrevocable Trusts are used if (1) you are absolutely giving up use of the assets and, say, want them donated to a charity or used specifically for something and you want to control that they are used that way even after you are gone or not involved.  You do NOT want a Trustee to be able to change the use. or (2) you have potential heirs that you believe will try to change your desires after you pass.  Many years ago when AIDS was considered a fatal disease gay individuals put property in Irrevocable Trusts to ensure that their lover (who at that time could not be a legal spouse) would get their property and that their estranged families would not try to take their assets.  The Trusts worked as they were designed.  However AIDS because less of a death sentence and those Trusts did pass assets on to people who had broken up / were no longer partners.  They were truly irrevocable.  Some I know of tried desperately to 'break' them with both parties agreeing, but the property was not able to be transferred out of the Trust.  Once an asset was titled to the Trust it was irrevocable, it could not be backed out or sold.  That is how these trusts were written.  Because of this, the attorney that wrote my parent's initial Trust would not make Irrevocable Trusts, because if they are tightly written and truly irrevocable, and life changes one can be stuck with a decision they no longer like.

Some people may use an Irrevocable Trust if they have a beneficiary/child that has a lack of self control.  They often only allow the beneficiary to take out something like 5% of the value plus earned interest.  So someone could not spend it all at once.  But this could also be done with a Revocable Trust.

Really think about what you want in an Irrevocable Trust and why that could not be done in a Revocable Trust.

I use Family Trusts: they can hold property.  These are also called AB or ABC Trusts.  For me one Trust holds personal property, and other personal stuff, another holds solely rental property and things with the rental business.  After my death the Trusts are managed differently, splits to heirs are different, thus the different Trusts.  A Family Trust can be used to solely hold real estate.  The Trustor decides what the Trust will hold.

For your concern about lawsuits.  All Trusts should have a statement that the Trust assets can not be used for lawsuit settlements.  Always!

Trusts are not registered, but property held in the Trust are titled by: Name of Trustee, Trustee (the title, just that word), XXX Trust.  so unless the Trustee is named a common name, he or she can be found.

Jack B. · Answer

Because this is the most recommended option I see in my research, it's a tactic in damn near every article on asset protection. Wyoming IR Trusts.

What's to prevent the trustee that is third party from stealing the money?

I replied to your PM, let's talk. I'm looking to move forward with a decision on this soon. If you have other options, I'm open to hear them.

Key things for me are:

1) Preventing the trust assets from being lost to a lawsuit

2) Preventing anyone who oversees the trust from stealing the money.

3) Being able to buy investments with money from the trust. Such as rentals (mortgaged ideally), stocks, etc.

I've read about land trusts, but they don't work with a mortgage with most lenders from what I've read. And they largely rely on anonymity to protect you. Not bullet proof enough.

Jack B. · Answer

You are apparently really ignorant. What exactly do you think the point of this thread is Genius? It's to find out the facts vs what the attorney I met with told me. Where did I self acknowledge ignorance? I specifically corrected the guy above who made claims that were entirely untrue. Each and every one of his claims. Somehow that means I'm not only ignorant, but self acknowledging I'm ignorant. What a joke. Go away troll. You add literally nothing to this thread and your very existence is a waste of time.