What are irrevocable trusts?

Creating an estate plan requires the creator to determine the most effective ways to relay their wishes. When it comes to assets they want to pass down, there are a few options. Some people may list the items in their will, but others may establish trusts.

Some trusts are irrevocable, which means they can’t be canceled or changed by the creator unless they obtain the permission of the court or the beneficiaries. Once they’re established and funded, the creator relinquishes control to the trustee. This comes with some important benefits.

Protection from creditors and judgments

One of the biggest appeals for many people is that irrevocable trusts provide protection from the assets being claimed by judgments or creditors. This is especially important for individuals who have considerable debt and those who are in professions that are at high risk of monetary judgments.

Estate value reduction

The assets that are transferred into an irrevocable trust aren’t considered part of the creator’s estate. This can reduce the overall value of the estate, which may have tax benefits.

Avoiding probate

The irrevocable trust will avoid probate, which means the beneficiaries can receive their inheritance in a timely manner. This can also help to control the costs associated with the process, and it provides the beneficiaries with more privacy since the terms of the trust aren’t part of a public probate record.

Any adult who hasn’t yet created an estate plan or who wants to add a trust to their current plan should consult with someone familiar with these matters. That individual can assist them with determining their options, how each will impact them and what the best way to meet their goals is.