People who are creating an estate plan must ensure that they consider every option for getting their assets to their loved ones. While most people focus on wills, trusts shouldn’t be left out of the possibilities.
When you’re looking into trusts, you’ll notice that they’re categorized as revocable or irrevocable. Revocable trusts can be changed, but that’s not the case for irrevocable trusts.
How do irrevocable trusts work?
Because irrevocable trusts can’t be changed, there are some significant benefits for the creator and beneficiaries. Once the trust is established and funded, the assets are controlled by the trustee. The creator doesn’t have any control over the assets.
What protections do irrevocable trusts provide?
Trusts bypass the probate process. This means your loved ones can receive the assets quicker than what’s possible if you try to pass them down in a will. Another benefit is that the assets in the trust are protected from your creditors. This ensures that your loved ones will receive as much as possible. The assets in the trust aren’t considered part of your estate. Being able to remove the value from your estate may reduce the tax liability of the estate.
The irrevocable trust is only one of the elements that you need to consider when you’re creating an estate plan. Setting everything up so your wishes are clear and legally enforceable is the priority. Working with someone who understands your wishes and the circumstances in your life may be beneficial.