Creating an estate plan is a priority for adults. While some choose to write out a will, others take their estate planning further by establishing at least one trust. Setting up a trust requires deciding what type of trust you need.
Trusts come in many types, but they’re all categorized as either irrevocable or revocable. A revocable trust enables the creator to keep control of the assets, but it doesn’t offer the same protections as an irrevocable trust. Many people are wary of irrevocable trusts because they have to give up control of the assets in the trust, but there are significant benefits to doing this.
Protection from creditors
One of the most important protections, especially for high-risk professions, is protection from creditors. Since the creator relinquishes control of the assets in the trust, creditors can’t lay a claim to those assets. This preserves the assets for your beneficiaries.
Another benefit of irrevocable trusts is that the beneficiaries have more privacy than what they’d receive if they had to go through the probate process. Because the assets are passed down through a trust, they don’t have to wait on probate. This can save them time and money.
You must ensure the trust is set up correctly if it’s irrevocable. As the creator, you can’t change or dissolve the trust unless you have the court’s permission or everyone named in the trust. Working with someone who’s familiar with this aspect of estate planning should give you peace of mind that your loved ones will receive precisely what you intend when you pass away.