Legal Representation Executed With Integrity

What is an irrevocable trust?

On Behalf of | Jun 9, 2024 | Estate Planning

Creating an estate plan is a vital duty for all adults, especially if they want to have a say in what happens to their assets when they die. An adult’s estate plan can include a will and trusts to relay their plan for their assets.

Anyone who’s interested in establishing a trust should ensure they understand exactly what the trust will accomplish and how the trust will be handled. Trusts are divided between revocable and irrevocable trusts. A creator can change or establish a revocable trust, but that’s not the case with an irrevocable trust.

What happens when you create and fund an irrevocable trust?

When you create and fund an irrevocable trust, you relinquish assets to the trustee over the trust fund. The trustee will then care for the assets. Once you pass away, the trust is distributed according to your wishes.

Can an irrevocable trust ever be changed?

In most cases, the irrevocable trust can’t be changed or canceled. There are two primary exceptions to this. The trust can be altered if the beneficiaries agree to the changes or if the court orders the alteration of the trust.

What are the benefits of an irrevocable trust?

Irrevocable trusts have many benefits, most of which are due to the fact that the creator doesn’t have control over the assets. One of the most important benefits to some creators is that the trust gives the beneficiaries privacy. An irrevocable trust doesn’t have to be filed with the probate court, so the terms can remain out of the public record.

Assets in an irrevocable trust don’t count toward the value of the creator’s estate. This can provide tax benefits that enable the beneficiaries to get more of an inheritance. The irrevocable trust also provides protections against the creator’s creditors trying to clam them for repayment.

An irrevocable trust is only one tool that adults can use when they create a comprehensive estate plan. Ensuring they have everything together can give them peace of mind now because they know they’re taking care of their loved ones in proactive ways.