Creating an estate plan is a critical task that all adults should complete. Part of this process is determining who should get which assets and how those assets should be passed down. This can be done through a will, but there’s also the option of establishing a trust.
If you opt to use a trust to handle asset distribution after you pass away, you may notice the term “irrevocable” associated with certain trusts. An irrevocable trust is one that can’t be changed or voided unless you have the permission of the court or of all named beneficiaries.
Benefits of an irrevocable trust
While the inability to change the trust might seem very restrictive, it comes with significant benefits. These benefits are all possible because you don’t control the trust. Instead, the trustee is in control of the assets and distribution.
One of the primary benefits of an irrevocable trust is that it can preserve the wealth included in it because your creditors can’t stake a claim to the contents of the trust. This means those assets are able to be passed to your intended beneficiaries.
Once an irrevocable trust is established and funded, the contents of it aren’t part of the estate. This can help to reduce the estate tax that’s due after you die. It’s critical to understand the options you have for a comprehensive estate plan. Working with someone who understands your circumstances and can help you determine how to meet your goals is critical.
