Individuals who are creating an estate plan need to find ways that they can preserve their assets so they can pass them down to their intended beneficiaries. This can be done through various methods, one of which is the irrevocable trust.
An irrevocable trust is a legal tool that works as part of a comprehensive estate plan. It enables you to set the terms for distributing the assets and holds them until you pass away and they’re distributed.
Who controls an irrevocable trust?
You set all the terms of an irrevocable trust and name the beneficiaries. Once the trust is established and funded, control shifts to the trustee. You won’t have any control over the assets in the trust once the trustee takes control.
Can you change the terms of the trust once you set it up?
One of the hallmark traits of an irrevocable trust is that you can’t change the terms or void it. There’s an exception to the permanency of these trusts if all the beneficiaries agree to the changes or if the court that holds jurisdiction approves.
What are the protections of an irrevocable trust?
Because you don’t have control over the assets, your creditors can’t stake a claim to them. This enables you to protect those assets so they can be passed along to your beneficiaries.
Once you fund the irrevocable trust, those assets are removed from your estate. This can reduce the value of the estate, which may reduce the taxes that are due on it.
Your beneficiaries can also benefit from the privacy of an inheritance being handled through a trust since trusts don’t go through the probate process. This can also enable them to receive the inheritance in a more efficient manner. Working with someone familiar with estate planning is beneficial in these matters.