If you’re creating an estate plan, you need to determine what options you should use to pass assets down to your beneficiaries. One of these is a trust, which is a legal tool that holds your assets until you pass away. At that point, the assets are passed to your loved ones based on your instructions.
Trusts are classified as either revocable, which means they can be changed, or irrevocable, which means they can’t be changed except under certain circumstances. If the court approves or the beneficiaries consent, you can change the terms of the trust or cancel it. Consider these points if you’re thinking about an irrevocable trust.
Benefits of an irrevocable trust
One of the main benefits is that the assets in the trust are protected. Because you transfer control of the assets to a trustee, they’re shielded from claims by creditors and lawsuits. This is beneficial if you have a high-risk occupation because it protects the assets if there’s a successful claim made against you.
When you fund the trust, the assets aren’t considered part of your estate any longer. This can provide considerable tax benefits, especially for individuals who have a high-value estate.
Creating a comprehensive estate plan is one of the most responsible things you can do as an adult. It’s a way to provide for your family members after you die. Ensuring that you have everything set up in a concise manner that can be upheld after you pass away is beneficial.