Creating an estate plan is a challenging undertaking because there’s so much to think about. For most people, ensuring that they get their loved ones the best inheritance possible is a priority.
Passing assets to loved ones is a priority of most estate plans. This can be done through the will, but it may also be handled in a trust. All trusts are either revocable or irrevocable. A revocable trust is one that can be changed as the creator sees fit, but an irrevocable trust can’t be changed unless the creator gets permission from the court or the beneficiaries.
What are the benefits of an irrevocable trust?
Once an irrevocable trust is established and funded, the assets are under the control of the trustee. Because the creator doesn’t control them, there are several protections that occur. The most important protection for some people is that the assets can’t be claimed by creditors. This is critical for individuals who are in high-risk professions and those who have considerable debts.
Another benefit of an irrevocable trust is that it can reduce the value of the estate, which can lower the estate tax. This is important for people who have high-value estates that might subjected to considerable taxes.
Estate plans that go through probate become part of the public record, so anyone can find out the terms. Trusts give beneficiaries the benefit of privacy because they don’t have to go through the probate process.
Establishing an irrevocable trust must be handled properly. Working with someone familiar with these matters may make the process a bit easier.