Estate plans are highly personalized and must be set up based solely on the creator’s wishes. When you’re creating your estate plan, you’ll have to think about how you’re going to get your assets to your loved ones. This is sometimes challenging.
One option that you have is an irrevocable trust, which is a legal tool that allows you to spell out who will get your assets and how it will happen. An irrevocable trust is one that can’t be changed or canceled once it’s created and funded unless the beneficiaries or court approve the changes. While that may seem off putting, it comes with considerable benefits.
What happens when an irrevocable trust is created and funded?
After you create the trust, you will put the assets into it, which is known as funding it. At that point, the trust and assets within it transition to the control of the trustee. You won’t maintain any control over the trust, which is what allows some of the benefits to become possible.
One of the main benefits of an irrevocable trust is that creditors can’t stake a claim to the assets held by the trust. This makes an irrevocable trust a good idea for people who have high-risk jobs or may have other factors that increase the chance they’ll face claims against them.
Another benefit of irrevocable trusts is that the beneficiaries will have privacy that’s not possible if they had to go through the probate process. Trusts bypass the probate process, which also means that beneficiaries may be able to access their inheritance in a timelier manner.
A trust is only part of an estate plan, so it’s critical to ensure that you have everything set up in a way that reflects your wishes. Working with a legal team that is familiar with your situation can help you to ensure that everything is set up in a legally enforceable manner.