There are various components that you need to get set up when you’re creating an estate plan. For some people, having a will isn’t enough. This is usually because they have a complex estate. Those individuals may need to set up trusts.
When you’re trying to determine what type of trust to set up, you should know that there are two main categories – irrevocable and revocable. A revocable will is one that you can change or cancel. An irrevocable trust can’t be canceled or changed unless you have the approval of the beneficiaries.
While many people default to using revocable trusts, there are some points you should consider about irrevocable trusts. Remember, an irrevocable trust’s benefits, including tax-related benefits, are only present after you fund the trust. Be sure you take care of that important step to reap its best benefits.
Protection from creditors
One of the biggest benefits to an irrevocable trust is that it provides protection from creditors. Once you establish and fund the trust, the contents of the trust are protected from creditor claims. This is because you no longer have control over those assets. Instead, they’re controlled by the trustee.
Another great benefit of an irrevocable trust is that it doesn’t have to go through probate. This provides privacy for the beneficiaries because what they receive from the trust isn’t entered into the public record in a probate hearing.
Irrevocable trusts can be charitable trusts
You can set up an irrevocable trust as a charitable trust. This enables you to provide support to non-profit organizations you want to help. You have to determine whether a charitable lead trust or a charitable remainder trust is right for your situation.
Anyone who’s preparing an estate plan should ensure they understand how they can meet their goals. Working with someone familiar with these matters is crucial because you need to know that your wishes are clear. Finding solutions for complex issues that creep up is also important. Don’t waste time before getting your estate plan together.