The Unique Benefits of Irrevocable Trusts in California

 Posted on April 07, 2023 in Estate Planning

Estate planning gives you the opportunity to manage and distribute your assets in a way that maximizes the usefulness of those assets. Most people equate estate planning with having a will, but a will is just the beginning of your estate planning options. Trusts offer greater benefits than a will alone. There are many different types of trusts designed for many different purposes.

An irrevocable trust is a particular type of trust that allows for tax planning and asset protection opportunities.

How Does an Irrevocable Trust Work?

With any trust, a trustee is named who controls assets and manages them until they are distributed to beneficiaries. Trust assets bypass probate. One of the main differences between a revocable trust and an irrevocable trust is that a revocable trust can be modified or dissolved at any time. An irrevocable trust is much harder to change and typically requires the approval of all beneficiaries before it can be modified.

Assets in an irrevocable trust are held by the trust and no longer belong to the grantor, or person who created the tru`st. At first glance, this may seem like a disadvantage, but it actually comes with many advantages. Because the assets are held by the trust, they are protected from creditors, lawsuits, and other risks that could befall the grantor. Revocable trusts do not offer this type of protection. Because of the asset protection benefits associated with irrevocable trusts, these trusts are popular with physicians and other individuals who may be at risk of being sued.

Furthermore, trust assets held in an irrevocable trust are not included in the grantor's taxable estate. If your assets are greater than the federal estate tax exemption, an irrevocable trust can help you avoid incurring estate taxes. Irrevocable trusts are also sometimes used to provide financial support to an individual without reducing that person's eligibility for government assistance.  A special needs trust is an irrevocable trust used to provide financial support to an individual with disabilities without increasing the recipient's income and therefore making him or her ineligible for financial needs-based programs.

Contact a Los Angeles Estate Planning Lawyer

There are so many estate planning tools to choose from, it can sometimes feel overwhelming. With the help of a Los Angeles estate planning lawyer, you can create an estate plan that meets your needs. A trust is just one of many tools available; the right choice for you will depend on your individual situation. California estate planning lawyer David A. Schechet can provide the dependable guidance and practice advice you need. Call 800-282-4731 for a free consultation.

Source:

https://www.forbes.com/sites/matthewerskine/2022/08/05/what-is-a-trust/