Irrevocable Trust FAQs
An irrevocable trust is often a confusing estate planning document to many people. In this article, we will go over commonly ask irrevocable trust questions to help you better understand them and how they work.
What is an Irrevocable Trust?
An irrevocable trust is a type of estate planning document. It avoids probate. But you cannot change it once you sign it. You also lose control over any assets placed into the trust.
How is a Revocable Trust Different?
A revocable trust is also an estate planning document that avoids probate. But you can change a revocable trust at any time. You also maintain control over them until you pass, at which point your successor trustee will take over.
What are the Benefits of an Irrevocable Trust?
Irrevocable trusts can have several different benefits, depending on how they are set up. They can help you avoid estate taxes, protect assets from creditors, qualify for Medicaid, and much more.
Are There Different Types of Irrevocable Trusts?
Yes, there are several different types of irrevocable trusts. Each type accomplishes a different estate planning purpose. There are a few types of irrevocable trusts that are more common than others. There is an Irrevocable Life Insurance Trust, which helps to protect the death benefit of a life insurance policy from creditors and estate tax. Then there is a creditor protection trust that may be a helpful way to avoid problems with creditors. Additionally, there are irrevocable trusts that can help you to qualify for Medicaid benefits or keep you from being disqualified for other government benefits that you may currently be receiving.
How do Irrevocable Trusts Protect Assets?
When you title an asset into an irrevocable trust you lose any and all control over that asset. Due to this fact, the asset is no longer considered to be yours. This helps you with taxes, creditors, and government benefits.
What Type of Assets Can be Placed in Irrevocable Trusts?
There are no limits on the type of assets that you can place in an Irrevocable Trust. You can put in real property, bank account, investment accounts, life insurance policies, etc. However, what exactly you place in there will depend on the purpose that you hope for your Irrevocable Trust to accomplish.
Who Can Be a Trustee?
Any individual other than the Grantor, or person creating the trust, can be named. This would include the Grantor’s spouse, children, other family members, or friends. You can also name co-trustees. Or you can name a Corporate Trustee.
Can I Amend My Irrevocable Trust?
Once you sign your trust document, you will not be able to amend or revoke it. However, you can have your documents drafted in a way that your Trustee can have the ability to make some changes to deal with future circumstances. However, those powers are very limited.
Setting Up Your Irrevocable Trust
Now that you understand the basics of your irrevocable trust, you may be wondering what the next step is. You should need with a qualified estate planner who can help you set up your irrevocable trust according to your desired provisions.
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