You know estate planning can allow you to pass your assets on to your loved ones without incurring undue hardships like excessive taxes. You may not realize it, but other interested parties may go after a share of the property meant for your loved ones.
Those with significant assets or exposure to a high degree of risk may need custom strategies to safeguard their estate. Padding your plan with protection against lawsuits, creditor claims and other financial threats may secure the gifts and inheritances you wish to leave behind.
Should you consider an irrevocable trust?
As the term implies, irrevocable trusts cannot typically be altered or modified. Creating an irrevocable trust means relinquishing ownership and control of the property it contains. As a result, creditors cannot get the assets it holds because they no longer belong to you.
Of course, there are a few possible disadvantages associated with irrevocable trusts. The prospect of losing control over trust assets is undesirable for some, plus these trusts can be complicated to create and maintain.
Who may need an irrevocable trust?
Business owners often use irrevocable trusts to protect their assets from claims and frivolous lawsuits, especially those with multiple companies. Licensed professionals like doctors and real estate developers may also reap certain rewards, such as asset protection in the face of legal claims.
An unchangeable trust can also offer potential tax benefits and help to ensure you qualify for government benefits programs like Medicaid.
What should you do next?
Continue learning how an irrevocable trust may strengthen your estate plan and shield your assets for future generations. Consider obtaining legal guidance to ensure your plan conforms to California estate and probate laws.