What is a Irrevocable Trusts and Revocable Trusts, and how is it used in PMA’s?

Question -  What is a Irrevocable Trusts and Revocable Trusts, and how is it used in PMA’s?

Answer - Revocable trusts let the living grantor change instructions, remove assets, or terminate the trust.

Irrevocable trusts cannot be changed; assets placed inside them cannot be removed by anyone for any reason.

Revocable trusts allow beneficiaries to avoid probate court and guardianship or conservatorship proceedings.

However, revocable trusts have upfront costs, involve many steps to fund, and don't exempt the owner from needing a will. Irrevocable trusts are generally set up to minimize estate taxes, access government benefits, and for the protection of assets.

Irrevocable trusts are primarily set up for estate and tax considerations. That's because it removes all incidents of ownership, effectively removing the trust's assets from the grantor's taxable estate. It also relieves the grantor of the tax liability on the income generated by the assets. Personal Tax Benefits: When appreciated assets, such as stock and real estate, are transferred into the trust, the grantor will save on capital gains taxes. An irrevocable trust doesn't avoid taxes entirely. Property Ownership: Once you place property into an irrevocable trust, it no longer belongs to you. 

When you establish an irrevocable trust, the assets that you place in it no longer legally belong to you. An irrevocable trust typically cannot be revoked or amended without a court order or the consent of all beneficiaries. In exchange for giving up control over trust assets, the Internal Revenue Service offers certain tax benefits that are unavailable to revocable trusts. An irrevocable trust is taxed as trust income, rather than earned income, which can result in some tax savings.