People who are creating an estate plan often want to find the most effective way to pass down their assets to their beneficiaries. While it’s possible to do this through a will, your will would have to go through the probate process. That can take time, incur expenses and infringe on the beneficiaries’ privacy.
There’s an alternative available to passing assets down. This is a trust, which is a legal arrangement that can bypass probate and help to protect the beneficiaries’ privacy. Because of this, establishing a trust is the option that might be appealing to you as you create your estate plan.
Not all trusts are the same
Trusts are classified as either revocable or irrevocable. A revocable trust can be changed as you desire, but it doesn’t have some of the same protections as an irrevocable trust. An irrevocable trust can’t be changed once you set it up. The assets that are held by the trust are controlled by a trustee. The only way you can change the terms is if all the named beneficiaries agree or the court issues an order.
While the permanency might seem harsh, it’s what makes some of the benefits possible. One of the biggest benefits of an irrevocable trust is that your creditors can’t stake a claim to assets held by the trust. This helps to preserve them for your beneficiaries.
Another benefit is that the assets are removed from the value of your estate. This can provide considerable tax benefits, particularly in larger value estates.
In order to reap the benefits of the irrevocable trust, it must be set up properly. It might be beneficial to work with someone familiar with these matters so they can assist you in crafting a comprehensive estate plan.
