What are some practical uses of Irrevocable Trusts?
a. Transfers to Incomplete Gift Trusts for Asset Protection. Tim sold his business and ended up with $20,000,000 in cash. Tim had no current creditors or liability concerns, but he wanted to put the money in a safe place so he could begin some new entrepreneurial activities without putting the money at risk. Tim was not concerned about estate taxes because he was young, single, and he had many charitable interests that he wanted to benefit from his estate. Tim created an irrevocable trust but retained a veto power over distributions so that transfers to the trust would be incomplete gifts for federal gift tax purposes. Because there were no gift tax limits on the amount he could transfer, Tim was able to transfer the bulk of his funds to the trust without any tax consequences. Tim chose to have the trust governed by the law of Nevada so that no one could compel the trustee to make distributions to the creditor of any beneficiary. Tim’s trust gave the trustees discretion to make or with
