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    Most common in this area are preparation of wills, revocable trusts, irrevocable trusts, power of attorney, health care directives and HIPPA documents. A revocable trust is a trust that the grantor can revoke or amend at any time. It is also known as a “living trust.” The revocable trust is used to avoid probate and provide privacy, since it is not generally required to be filed and made public. A revocable trust offers no transfer tax savings but serves as an asset management vehicle during the grantor’s life and can help provide for the grantor upon his disability or incompetence. While the grantor is living, the trust is a grantor trust with its income reportable on the grantor’s return. At the grantor’s death, the trust becomes irrevocable and a separate taxpayer and generally serves as a will substitute, providing for the disposition of the trust property.

    An irrevocable trust is a trust that cannot be terminated by the settlor once it has been created. Changes are also very limited. An example of an irrevocable trust is an “Irrevocable Life Insurance Trust” (ILIT) which is created during one’s lifetime to hold life insurance on a person’s life. The purpose of the trust is to remove the life insurance policy from taxation at the deaths of both the insured and the insured’s spouse.

    Irrevocable trusts have many requirements under state law and within the terms and conditions of the governing instrument. New Mexico adopted the “Uniform Trust Decanting Act” (UTDA) effective January 1, 2017. The UTDA allow fiduciaries, in some instances, to modify some provisions of an irrevocable trust without consent of the beneficiaries or without court order. Decanting is a term used to describe the distribution of assets from one trust into a second trust. The UTDA allows a trustee to make certain changes to an irrevocable trust whenever the original terms and conditions do not allow for accomplishment of the settlor’s original intent.

    Some other trusts used in estate planning not discussed here are blind trust, business trust, bypass trust, charitable lead trust, charitable remainder trust, Clifford trust, Crummey trust, grantor-retained annuity trust, intentionally defective grantor trust, dynasty trust, generation-skipping trust, government trust, Medicaid-qualifying trust, Miller trust, Qualified-terminable interest property trust, Unitrust etc.