If you are planning your estate and wish to protect your assets while reducing your tax burden, an irrevocable trust may be an ideal solution. There was a time in which irrevocable trusts were used only by wealthier people and the elite. Today, anyone with assets can take advantage of the benefits that these trusts have to offer.
Fully grasping what an irrevocable trust can do and how it works takes time, which is why many people will avoid them outright. Before you do so, it may be a good idea to ask a trust lawyer, like a trust lawyer in Chandler, AZ, to review your financial situation and needs. You might find out that an irrevocable trust is your best estate planning tool.
Understanding Irrevocable Trusts
An irrevocable trust is a trust created by the grantor. Once it has been created and finalized, it cannot be revoked. This means the grantor cannot reclaim the assets held within the trust. In other words, the trust is permanent.
At its foundation, all assets belong to the trust. A trust can be looked at as if it were an entity, so no person owns the assets; rather, the trust owns them. This means creditors, ex-spouses, or people who believe they are an heir cannot claim the assets for their own benefit.
Establishing an Irrevocable Trust
The grantor is the person who creates an irrevocable trust. With the help of a trust lawyer, the grantor brings the trust into existence and finalizes it by signing it. A trustee must also be designated. This person will have the responsibility of managing the trust and overseeing its terms. As soon as the trust is created, assets can be placed into the trust. The trustee will manage those assets on behalf of any named beneficiaries.
The Benefits of an Irrevocable Trust
A trust lawyer can tell you that there are many benefits to having an irrevocable trust. Some of these include:
- Nearly any asset can be placed in a trust
- The trust protects both the grantor and beneficiaries from creditors, collectors, creditors, and divorce
- Assets can be held in the family forever
- Assets can be removed from the taxable estate belonging to the grantor
- It may be possible to avoid death taxes
Types of Irrevocable Trusts
Contrary to what you might have heard, there is more than one kind of irrevocable trust. This form of trust can come in many shapes and sizes. An experienced trust lawyer will have created many different irrevocable trusts including:
- Dynasty trusts
- Grantor trusts
- Education trusts
- Spousal lifetime access trusts
- Irrevocable life insurance trusts
- Qualified domestic trusts
- Pet trusts
- Marital trusts
- AB trusts
- Charitable remainder annuity trusts
- Credit shelter trusts
A Trust Lawyer Will Be Needed
It will be nearly impossible to correctly draft an irrevocable trust without the assistance of a trust lawyer. Furthermore, most trusts will allocate funds to retain a trust lawyer for further legal advocacy and representation. If you are considering a trust of any kind, it may help you to speak with a knowledgeable trust lawyer.
Thanks to Citadel Law Firm for their insight into hiring a trust lawyer for an irrevocable trust.