Making a plan about who you want to receive what after you pass away is important for adults. The best way to do this is to get the estate plan in order. Getting this set up requires a multifaceted approach.
One option that you have is to set up and fund an irrevocable trust. This trust has some significant benefits, but those come only because you have to relinquish control over the assets in the trust. Those assets are managed by a trustee. Once the trust is created, you can’t change the terms of the trust or cancel it. Provisions apply that enable you to get permission from the beneficiaries or the court.
Protection from creditors
Creditors can’t claim the contents of the trust because you don’t have control over the assets. This means you can pass as much of your estate along to your beneficiaries as possible. If you have a career that’s at a high risk of lawsuits being filed against you, an irrevocable trust may be a viable option for your estate plan.
Taxable value of the estate
Another way that irrevocable trusts are beneficial is that they allow you to remove the assets from your estate. This can lower the taxable value of the estate, which can reduce the estate taxes your loved ones have to pay.
Trusts are only one part of an estate plan, so it’s critical that you ensure you consider the other components you may need. This includes your will, as well as powers of attorney designations. Discussing your situation with someone who can assist you with getting the plan together may provide valuable insight.