An irrevocable trust is the kind of trust that doesn’t allow you to change its rules once it has been established. This particular kind of arrangement can be beneficial in a few ways, but we’re ready to help if you’re on the fence about whether or not it will work out for you. A Woodland Hills trust attorney from our firm can answer any questions that you have about these types of trusts.
What’s the Difference Between an Irrevocable Trust and a Revocable Trust?
When you establish an irrevocable trust, you usually cannot change its rules. Changing the arrangement would often require a court order and an agreement among all beneficiaries. So what usually happens is that someone establishes an irrevocable trust and then they take their hands off of it. They allow their selected trustee to manage it.
A revocable trust allows you to change the rules when you want to. Because of these differences, the assets in a revocable trust still belong to you as far as most bystanders are concerned. The assets in an irrevocable trust do not. This can provide some advantages, which we’ll get to in a bit.
Is There More Than One Type of Irrevocable Trust?
There are multiple types of irrevocable trusts that are popular with estate planners. You can establish:
Spendthrift trusts: These leave assets behind for loved ones, but limits their access due to their poor financial planning skills. A trustee helps them manage their inheritance so that it is not squandered.
Special needs trusts: These kinds of trusts allow you to leave assets behind for loved ones with special needs. The main benefit is that this will not preclude them from seeking government benefits, like SSI or Medicaid.
A qualified personal residence trust: This essentially allows you to stay in your home while passing it on to a loved one.
Charitable trusts: Some types of irrevocable trusts can be used to give money to charitable causes while you are alive and after you pass on.
Why Establish an Irrevocable Trust?
It may seem like a bad idea to establish a trust that doesn’t give you direct access to your assets, but an irrevocable trust offers some important benefits. Because the assets in your trust are not technically yours anymore, they are protected from creditors and lawsuits. You can also lower a potential estate tax bill by “removing” these assets from your estate and placing them in an irrevocable trust.
How Should I Choose a Trustee?
Since you are not in charge of your trust, you need to choose well when deciding on a trustee. This person should be responsible and able to take on the obligations of the role. You can choose a friend or family member, but you can also opt for a professional, like a company that provides trustee services or an attorney.
Contact Our Law Firm
If you’re ready to learn more about your estate planning options, contact the Law Offices of Yacoba Ann Feldman. We can help you set up an irrevocable trust or take advantage of other types of useful estate planning tools.
