With the roster of estate planning tools available, people are exploring alternatives to the traditional will.
The irrevocable trust is one alternative that has grown in popularity as of late. It offers estate planners unique benefits and rare versatility. However, like everything else in the estate planning realm, it’s not for everyone.
If you want a less conventional way of organizing your estate, here the pros and cons of the irrevocable trust.
The pros
The estate tax is the bane of many estate planners. The tax itself is heavy, and the notion of having to pay the IRS after your death is irksome. Thus, we arrive at one of the irrevocable trust most appealing features – it is a convenient way to avoid the estate tax.
The assets transferred into the trust are no longer considered part of the trustor’s estate. Therefore, they are exempt from the estate tax.
Are you concerned that litigious creditors are after your assets? Simply move them into an irrevocable trust. Once the assets are moved into the trust, they are technically no longer the property of the trustor, and cannot be used as restitution.
Estate administration is exhausting. After all, settling an estate equitably and legally is a time-consuming ordeal, especially when you’re still grieving the person that died. The process becomes all the more cumbersome if the estate ends up in probate court.
If you are dreading probate, an irrevocable trust may be the solution. All assets transferred into the trust are no longer considered part of the estate and are therefore not subject to probate.
The cons
There is no one-size-fits-all approach to estate planning, and irrevocable trusts are not for everyone.
Cost is certainly a drawback for many. Although a trust saves you money in certain areas, the trust itself may cost thousands of dollars to set up.
Additionally, irrevocable trusts live up to their name. Once the trust is created, it’s terms cannot be modified. If your situation is fluid, a more flexible arrangement may be in your best interests.
Simply put, estate planning requires the help of an experienced estate planning attorney. An attorney can identify risks and structure the plan around your unique interests.
Springfield, Illinois residents should act promptly. Despite popular sentiment, you’re never too young to begin planning your estate. If cost is a concern, many lawyers offer a free initial consultation at no out-of-pocket cost to the client.