Benefits Of An Irrevocable Trust

Trusts are a legal arrangement where property is held for the benefit of others. Irrevocable trusts are a permanent trust that has some benefits over revocable living trusts.

The most common form of irrevocable trust is a formerly revocable trust after the creator has died. Upon death of all creators, revocable trusts become irrevocable. At that point, the final form of the trust is what the successor trustee must carry out. This protects the wishes of the deceased by preventing changes away from the creator’s wishes.

Irrevocable trusts are useful to protect assets from lawsuits or creditors. The assets in the trust belong to the beneficiaries. Since the creator no longer has the power to take the assets back in their possession, the creator cannot be forced to use that power.

Irrevocable trusts can also be used to take care of a loved one with special needs. These heirs typically cannot possess property directly because of an inability to manage their own affairs and/or interference with government benefits. Having an irrevocable trust will ensure that those assets are used for the special needs beneficiary. Even better, the trust can be funded from multiple sources, such as multiple estates or insurance policies, without concern that the trust creator will take the funds for themselves.

There are many other forms of irrevocable trust. Each one varies based on the situation and goal of the creator. While an irrevocable trust has several advantages over a revocable trust, creators need to be careful because they have much less freedom. All decisions are final and may be impossible to change. It is best to consult an estate planning attorney familiar with these forms of trusts to learn about your options prior to creating an irrevocable trust.