A trust is an estate planning tool that allows a person to control their assets during their lifetime and make provisions for incapacity and death.
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One thing you should know about irrevocable trusts is that, unlike revocable or living trusts, irrevocable trusts cannot be changed or amended. They are set in stone.
A second thing that you should know about irrevocable trusts is that they have significant advantages, and also unique disadvantages.
Irrevocable trusts are often used as a person advances in age. Once they know that their circumstances are unlikely to change, we sometimes recommend the use of an irrevocable trust for their estate plan.
Why would someone want an estate plan that they cannot change?
Irrevocable trusts offer many advantages. These include:
- Reduction of estate tax complications and reduction of taxes,
- protection against creditors,
- They can utilize special features to build wealth for future generations,
- They can prevent loss of assets if long-term care is necessary,
- and more.
However, there are many drawbacks of an irrevocable trust as well. Some of these include:
- They cannot be changed, so no revisions will be allowed
- They are very costly
- A tax return will need to be added each year.
- There is some loss of control.
The third thing that you should know about irrevocable trusts is that many of the drawbacks can be remedied by careful drafting.
We help our clients decide if an irrevocable living trust is right for them. If it is we find ways to draft around potential issues and downsides, such as putting in language allowing the grantor to replace the trustee if they are not acting appropriately.
Let us know if you have questions as to whether an irrevocable living trust is right for you or your loved ones.
Contact us today to help you get the right documents in place or to update your current estate plan. We will plan so that you don’t have to worry about your future.
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