Trusts are common tools used in estate planning and can be utilized to distribute assets with certain conditions attached to them. For example, assets maybe left to a beneficiary with strict rules that the proceeds of the assets contained within the trust can only be paid out when the beneficiary turns a certain age. There are a wide variety of trust types, each with their own benefits. This is why it is imperative that those engaging in estate planning fully discuss their estate planning options with an attorney of their choosing.
One trust option available to estate planners is the irrevocable trust. As its name implies, this type of trust is created by an estate planner and, once property is transferred to the trust, that transaction cannot be undone. Therefore, an estate planner cannot place a business or a residence into the trust and then later withdraw it. So, why would anyone want to create an irrevocable trust?
There are a number of reasons. To start, assets that are placed in an irrevocable trust are not subject to estate taxes. Also, by placing assets into an irrevocable trust, an individual can reduce the value of his or her estate, thereby allowing him or her to qualify for certain governmental benefits such as Medicaid. By placing assets into an irrevocable trust, an individual can also ensure that the asset is distributed to the beneficiary in accordance with the conditions that are placed upon the trust.
So, as you can see, an irrevocable trust can have many benefits to those who utilize them. However, this type of trust is not right for everyone. This is why it is important to discuss all of an individual's estate planning options before choosing any one of them. Qualified estate planning attorneys stand ready to help individuals identify the estate planning tools that will help them reach their estate planning goals. Being well informed can help ensure your estate plan plays out the way you intended.