If you’re thinking about creating a plan for how your estate should be handled, then you’re probably wondering whether you should create a will or a trust as part of your estate plan. While there are some definite benefits to creating a trust over a will, the types of trusts available – namely, revocable versus irrevocable trusts – tend to confuse people. Speaking with an experienced Springfield irrevocable trust attorney can help demystify some of the complexities surrounding these types of estate planning tools.
While a revocable trust allows you to alter or cancel some of the benefits to the beneficiary whenever you want, an irrevocable trust remains in place the moment its created. Below, we review some of the pros and cons associated with irrevocable trusts.
Irrevocable Trusts: A Primer
There are two types of irrevocable trusts: the irrevocable living trust and the irrevocable testamentary trust. In the former, you would be creating and funding the trust in your lifetime. In the latter, the trust won’t be funded until your death. Some examples of irrevocable living trusts are life insurance trusts, spousal lifetime access trusts, and charitable remainder trusts. If you have any of these types of trusts, your assets will avoid probate court and therefore be subject to far fewer fees.
Examples of irrevocable testamentary trusts are those that are set up for naming the trustee that will acquire some or all of the assets within it. With these types of trusts, your assets will be reviewed in probate court, so you won’t be able to avoid that process.
Pros and Cons of Irrevocable Trusts
A Springfield irrevocable trust attorney can help you better understand the benefits and drawbacks of an irrevocable trust. Some of the pros include:
- Any taxable assets placed into an irrevocable trust would likely reduce your tax liability, making it a great option for people with large estates.
- You can establish conditions for how the trust should be distributed, thereby eliminating any mishandling at the time of your passing.
- If your trust gifts property to your children, you can take advantage of estate tax rules by providing a tax-free gift.
- A trust protects your estate from legal claims related to professional liability – an important benefit for lawyers, doctors, and other highly litigious fields.
Cons may include:
- Once you move your assets into an irrevocable trust, you lose control of them. You’ll have to get permission from your beneficiaries to make any changes.
- If you suddenly begin experiencing financial hardship, you won’t be able to change the income distribution you allotted in your irrevocable trust.
- If your priorities, goals or finances change, you won’t be able to make any amendments to the trust.
Your Springfield Irrevocable Trust Attorney Can Help
If you’re looking for further guidance or insight into creating a trust that works for you, contact a Springfield irrevocable trust attorney at our firm.