Creating an estate plan is a major duty that every adult should ensure they take care of. Part of this involves outlining who will receive which assets, which can be done in several ways. Some people do this through their will, but that doesn’t provide protection for the beneficiaries.
Another option is to use trusts to get assets to beneficiaries. Trusts that can be changed are known as revocable. Trusts that can’t be changed are irrevocable. Opting to use irrevocable trusts provides considerable protections for your beneficiaries.
What protections come with irrevocable trusts?
When you create and fund an irrevocable trust, the assets in the trust become the responsibility of the trustee. You don’t have control over them once that happens. Your inability to change the trust and the fact that you can’t control the assets give your beneficiaries considerable benefits.
One of the primary benefits that your loved ones will have is that your creditors can’t stake a claim to any of the assets in the trust. This means that the assets can be taken to satisfy judgments or accounts in collections.
Another benefit is that the assets are removed from your estate. This can help to ease the tax burden for some estates, particularly those that are higher value.
Trusts bypass the probate process, so your loved ones may receive their inheritance in a more timely manner. It’s critical to ensure that the trust is established in a way that clearly conveys your wishes. Working with someone familiar with these matters may be beneficial to ensure everything is set up properly.