People who are creating an estate plan have to determine how they’re going to get their assets to their loved ones. This can be done through the will, but there’s also the option of using a trust to handle this.
If you decide that you’re going to use trusts, you’ll see that there are some that are revocable and others that are irrevocable. The primary difference between these is that revocable trusts can be changed, but irrevocable trusts can’t be changed.
What happens when you establish an irrevocable trust?
Once you establish and fund an irrevocable trust, the assets within the trust are controlled by the trustee. You don’t have control over them any longer, so the only way that you can change the terms is if you have the permission of the court or all of the beneficiaries named in the trust.
Why is the permanency of the irrevocable trust beneficial?
Because you don’t have control over the assets any longer, the assets within the trust are protected from creditors. This means that your loved ones can reap the full benefits from the trust. Another benefit is that the assets in an irrevocable trust are removed from the estate’s value. This can help to save on taxes, particularly for high-value estates.
Creating an irrevocable trust can be an important part of setting up an estate plan. It may be beneficial to work with someone who can assist you with setting up the entire estate plan. Once this is done, you can enjoy the peace of mind in knowing that you have done what’s necessary to take care of your loved ones.