One mark against the revocable living trust has been that it does not offer asset protection; many people donít like irrevocable trusts because with most versions they lose control over assets and other conditions.
The Irrevocable Pure Grantor Trust (aka The "IPUG")
The IPUG provides asset protection along with advantageous tax benefits. IPUGs are taxed like a grantor trust, where taxes pass through to the grantor, and the trust itself is not subject to tax.
Three Types of IPUGs:
Control-only, Income-only and Third-party.
The control-only lets the grantor maintain full control over the trust assets as well as the trust income. The grantor can distribute the assets to whomever he or she wishes (except themselves), and the assets are also protected from creditors.
In the income-only IPUG, the grantor surrenders the right to the assets in the trust, which are only available to beneficiaries. However, the grantor can access the income from the trust. The income can also be vulnerable to creditors; however, the beneficiary-controlled assets are protected.
A third-party IPUG is where the grantor establishes a trust for the benefit of a third party. This is most popular among adult children who wish to establish a trust for minors or parents, and generally occurs when the parents have already transferred assets to children but still want access to the assets. The trust assets are protected against creditors of the adult children as well as divorce.
The Private Asset Trust
Discuss the potential with your professional estate planner. Consider the benefits of the Private Asset Trust.