There are many different types of trusts out there, and which kind of arrangement works best for each person can vary based on a number of factors. One type of trust our Rockland County estate planning lawyers get asked about often is the irrevocable trust. This kind of trust can protect your assets, but it also comes with some limitations that are important to be aware of.
How Does an Irrevocable Trust Work?
When you establish an irrevocable trust, you set some rules for it and then you take your hands off of the wheel. You are not in control of this kind of trust. Instead, you select a trustee to control the assets inside of it and dole out money to beneficiaries as needed. In most cases, you cannot change the rules once you have established this type of trust.
What Are Some Benefits of an Irrevocable Trust?
Why would you purposely give up control of some of your assets? You make an irrevocable trust because there are some benefits to doing so. You could:
Qualify for certain government programs and benefits: An irrevocable trust removes assets from your estate, and that can make it easier to qualify for programs like Medicaid. There are many rules concerning this, so we suggest talking to a lawyer if this is one of your goals.
Protect your assets from creditors: If assets are in this type of trust, creditors usually cannot try to take them. This is because they are not technically your assets anymore.
Reduce an estate tax bill: If assets are removed from your estate in this way, they would not be part of the calculation when an estate tax bill is tabulated.
Are There Different Types of Trusts?
There are a few different types of irrevocable trusts. You and your family could benefit from the use of a:
Special needs trust: You can put assets in this type of trust and use them to provide for a special needs family member. This is better than just passing down money, which could affect your loved one’s ability to qualify for government benefits like Medicaid.
Spendthrift trust: You love your kids, but they’re bad with money. This kind of arrangement allows the trustee to decide when and how assets are dispersed and what they are used for.
Charitable remainder trusts: These can be used to support charitable causes.
Do I Need a Lawyer to Make a Trust?
You should talk to a lawyer if you want to set up an irrevocable trust. We can tell you about all of your estate planning options and make sure that you completely understand what’s going to happen to your assets.
Schedule Your Consultation Today
If you’re ready to learn more about your estate planning options, contact the Lauterbach Law Firm. We can help you set up an irrevocable trust or any other kind of trust that you can think of. If you can benefit from an estate planning tool, we’ll help you take advantage of it.
