925.244.1185
San Ramon, CA

Horizon Elder Law & Estate Planning Blog

Wednesday, June 30, 2021

What Is an Irrevocable Trust?

Trust agreements are used in estate plans. These flexible estate planning tools allow you to customize your estate plan to meet your needs and goals. With many different types of trusts, it is important to understand the differences before choosing the type of trust for your estate plan. A California estate planning attorney assists individuals as they identify their estate planning goals and advises which trust agreements are best for their situation.

What Is an Irrevocable Trust?

Trust agreements fall into one of two categories – irrevocable trusts and revocable trusts. Generally, irrevocable trusts cannot be changed, modified, or revoked after it is created. There are rare exceptions, but they are few and very specific.

When you transfer property into the trust, you lose possession of the property permanently. The property transfers to the trust beneficiaries according to the terms you set when you created the trust agreement. Because the trust is not revocable, you cannot change your mind and take possession of the trust property.

With a revocable trust, you retain ownership of the property in the trust because you can change the terms of the trust or revoke the trust at any time before your death. Revocable trusts become irrevocable trusts upon the person’s death.

Should I Choose an Irrevocable Trust for My Estate Plan?

Even though an irrevocable trust cannot generally be changed after it is created and funded, there are benefits of using an irrevocable trust during estate planning.

Some advantages of an irrevocable trust include:

Avoid Probate

The property passes directly to the beneficiaries of the trust. Your heirs do not need to go through probate, and the assets never become part of your estate.

Protect Privacy

Because the trust is not part of your estate, the terms of the trust and the property that the trust holds never becomes part of the public record. The only people who know about the terms of the trust are the trustee, beneficiaries, and any professionals who assist with managing the trust.

Flexible Control Over Beneficiaries

The trust agreement allows you to decide when and how your beneficiaries receive the assets from the trust. An irrevocable trust can continue long after your death, which allows you more control over how you want your family members or other parties to receive their inheritance.

Tax Protections

Because the trust is irrevocable, you no longer own the property. Therefore, the property is not included in the taxable portion of your estate. Therefore, individuals with high-net-worth estates may want to consider using one or more irrevocable trusts to lower their estate tax. Irrevocable trusts could also provide other tax benefits, depending on the situation.

Creditor Protection

The assets in an irrevocable trust are protected from your creditors and the creditors of your beneficiaries. If you are sued, a judgment cannot attach to the assets within the irrevocable trust. However, suppose you funded an irrevocable trust after a lawsuit was filed or immediately before the filing of a lawsuit. In that case, the court could determine you transferred the assets to avoid paying the debt.

Contact Our California Estate Planning Attorney for More Information

Estate planning benefits everyone. The advantages of estate planning benefit you during your lifetime by protecting your assets and giving you the peace of mind that you have plans in place to protect your assets and your wishes for health care if you become incapacitated.

After your death, a comprehensive estate plan benefits your heirs by ensuring they have the resources available to provide for their needs. Estate plans ensure your wishes are carried out instead of allowing intestate laws to decide how your property is distributed.

Contact our California estate planning attorney for more information or to get started on your estate plan.


Archived Posts

2021
2020
December
November
October
September
August
July
June
May
April
March
February
January
2019
December
November
October
September
August
July
June
May
April
March
February
January
2018
December
November
October
September
August
July
June
May
April
March
February
January
2017
December
November
October
September
August
July
June
May
April
March
February
January
2016
2015



© 2021 Horizon Elder Law & Estate Planning, Inc. | Disclaimer
2333 San Ramon Valley Blvd., Ste. 145, San Ramon, CA 94583
| Phone: (925) 244-1185

Elder Law | Estate Planning | About

Law Firm Website Design by
Amicus Creative