Creating your estate plan comes with many decisions. Some of these are centered around who’s going to receive your assets when you pass away. You can do this through your will, or you can use a trust as the vehicle for getting assets to your beneficiaries.
One type of trust that’s used in estate planning is an irrevocable trust. The downside to this type of trust is that once it’s created, it can’t be changed or revoked unless permission is granted by the court or all named beneficiaries. This may seem rigid, but it provides very specific benefits that may help your beneficiaries.
How does an irrevocable trust work?
The assets that are placed in an irrevocable trust are under the control of the trustee. Once this occurs, they are removed from your taxable estate, which may mean that your loved ones don’t have to pay as much in estate taxes.
Another benefit of you relinquishing control of the assets by placing them in an irrevocable trust is that the assets are shielded from creditor claims. This means that if you have debts or judgments against you, those assets can’t be taken by the creditors.
It’s critical that you weigh the benefits and limitations of an irrevocable trust before you decide on this option for getting assets to your beneficiaries. This is only one component of a comprehensive estate plan, so it’s critical for you to consider them all. Having everything in order now can be beneficial for you and provide a solid plan for your loved ones to follow.