Depending upon your lifestyle and financial needs, you may have considered creating an irrevocable trust. These can serve as an excellent tool to avoid taxes and protecting your assets. Keep in mind that there are a number of advantages and disadvantages that are associated with irrevocable trusts. To learn more about irrevocable trusts, review the following provided below.
What is an Irrevocable Trust?
An irrevocable trust is a trust that can’t be altered, revoked, or modified. Once an irrevocable trust is created and the terms are set, the beneficiaries are added, and the terms and conditions are set, the ownership of your assets are placed into the trust. After a person dies, the trust holds the assets for a certain period of time before they pass to the beneficiaries.
What are the Advantages of an Irrevocable Trust?
Setting up an estate plan can be a smart move given your individual set of circumstances. Specifically, it can reduce your tax liability in the sense that the larger your estate, the more you will benefit from the estate tax exemption. For instance, let’s say you choose to transfer your assets that are taxable from your estate into your irrevocable trust. Since setting up an irrevocable trust means that you no long own the assets therein and they no longer fall into your taxable estate, any generated tax income is thereby revoked.
Irrevocable trusts are also beneficial in that they:
- Protect against lawsuits – irrevocable trusts, unlike revocable ones, aren’t owned by the individual who set it up (known as the grantor). As such, creditors or anyone else who may choose to pursue legal action against you cannot access the assets to satisfy the debt.
- Protect against the misuse of assets – assets are dispersed on a conditional basis, which means that beneficiaries cannot recklessly spend or manage assets in a poor fashion.
- Avoid probate – once assets are placed into an irrevocable trust, the trust owns the assets. Rather than having to go through the probate process, the trust dictates how the property therein will be dispersed. This is kept private and out of the court system.
Our Columbus Irrevocable Trust Lawyers at Dawes Legal, LLC understand that you might have specific questions about your situation, so we invite you to contact us to learn about your legal options. We invite you to call us today 614-733-9999.