Encino, CA asked in Estate Planning, Tax Law and Social Security for California

Q: I would like to shelter my lump-sum SSDI payment from further taxation. I am currently in an "uncollectible" status.

A lawyer friend suggested an irrevocable trust. Does that make sense?

Thank you,

1 Lawyer Answer
Nina Whitehurst
Nina Whitehurst
  • Estate Planning Lawyer
  • Crossville, TN
  • Licensed in California

A: It is not clear what “further taxation” concerns you. Is it income tax? Estate tax? Real property taxes? Something else? It could be that you yourself do not understand the taxation of SSDI benefits. You should consult with a tax advisor about that. Most likely you will not need any kind of irrevocable trust if avoiding TAXES is your main concern but that can only be determined by engaging in a thorough process of evaluations your sources of income and deductions and assets.

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