Estate planning requires careful attention to detail as well as extensive planning to ensure that you are creating the right plan for both you and your family’s future.
Many often struggle when having to make the decision of which trust is right for their situation- especially when it comes to irrevocable trusts.
At Heritage Law, LLP, we make it our number one priority to inform you of all of your estate planning options.
What is an Irrevocable Trust?
You have two choices to fit your situation: revocable and irrevocable trusts. While a grantor could modify a revocable trust throughout his or her lifetime, that person would not be able to amend the irrevocable trust without the beneficiary’s consent.
When it comes to property, these are the two most common trusts:
Qualified Personal Residence Trust (QPRT) – which allows for holding of the primary holder’s main or secondary place of residence, as well as the ability to reduce its taxable value.
Testamentary Irrevocable Trusts – are funded after the grantor dies and are therefore based on the terms specified in a will. These trusts cannot be modified, as the primary giver has already passed. People often create these trusts for minors, with special instructions as to how or why the funds are to be used.
The Benefits of an Irrevocable Trust
There are several benefits to an irrevocable trust. They include:
- To leverage the estate tax exemption and earn tax breaks
- To gift assets to beneficiaries but to continue earning income from the assets
- To prevent misuse of the assets by a beneficiary
- To gift a residence to a beneficiary with better tax guidelines
Assets in an irrevocable trust have greater protection from creditors because you no longer own the assets. The ownership lies with the trust itself, freeing you from certain legal and tax burdens.
Which trust is right for you?
There is no one-size-fits-all trust for everyone. With different assets and beneficiary circumstances, you must look at all of your options with a knowledgeable estate- planning attorney. They can help map out the best financial foundation for your assets and property once you’re gone.
For more on how the experienced legal team at Heritage Law, LLP can you guide you in the estate planning process, contact us here.