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What Are Irrevocable Trusts Used For?

An estate plan may be made up of several different legal documents such as a will, a power of attorney for health care and/or finances, a living will, and a trust. There are several different types of trusts, but they typically come in the forms of revocable and irrevocable. With an irrevocable trust it cannot be changed, amended or revoked. In contrast, with a revocable trust you can manage the trust assets yourself and for your benefit and you can change it at any time. Upon your death, the successor trustee whom you named steps into your shoes and manages the trust assets according to the directions that you set forth in the trust document. One type of trust may be more suitable over the other depending upon what types of results you want to achieve.

One of the common reasons people incorporate trusts into their estate plan is because they want to spare their loved ones the hassle of probate. Both revocable and irrevocable trusts avoid the probate process, and this can be a very attractive option if you happen to have a large estate. However, you must fund the trust properly and you will have to transfer ownership of your assets to the trust before your death.

Essentially, any assets that you own in your name alone are subject to probate when you die. This is because probate is the court-supervised procedure which transfers ownership of your assets to your beneficiaries. But, the assets held in a trust transfer to your beneficiaries automatically, thereby making it so probate is not necessary. Some of the benefits of a trust include:

  • Assets held in a trust avoid probate proceedings.
  • Probate proceedings are public, but trusts are not a matter of public record.
  • Trusts allow you to control inheritances even long after you die, which may be appropriate if your beneficiaries are young or irresponsible with money.
  • One feature that is unique to irrevocable trusts is that they can be used to shield assets from creditors during your lifetime, this way you can be certain that you can pass something to your loved ones after you die.
  • Irrevocable trusts can be useful in Medicaid planning.

There are numerous types of irrevocable trusts that are made for different purposes; however, people generally establish irrevocable trusts to either reduce taxes or protect property. Just a few examples of irrevocable trusts include bypass trusts, QTIP trusts, charitable trusts, generation skipping trusts, and life insurance trusts. The charitable trust is designed to reduce income and estate taxes by making gifts to charitable organizations. Another form of irrevocable trust is the special needs trust, which provides financial support for a person with special needs.

At Perry, Murr, Teel & Koenenn (PMTK), our Gulfport estate planning attorneys have more than 130 years of collective experience to offer you. We can explain the various types of revocable and irrevocable trusts as well as all other relevant estate planning options available. Estate planning is a methodical process which must be tailored to fit each individual client; therefore, we are here to ensure that your specific needs and goals are met. We encourage you to contact our office to arrange a free case evaluation!

Categories: Estate Planning
Perry, Murr, Teel & Koenenn - Gulfport Probate Attorney
Located at 625 16th St, Gulfport, MS 39507
Phone: (228) 896-0020
Website:
Probate.com

The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.

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