The topic of irrevocable trusts comes up in conversation with my clients quite often, especially when discussing asset protection strategies. These special trusts can protect your assets from lawsuits, creditors, predators, and even nursing homes and save you thousands of dollars down the line. Here are three things I think you should know about irrevocable trusts.
First: they're here for good. One look at the name and it's right there, ‘irrevocable.' That means it cannot be terminated once created. While a revocable trust gets implemented to avoid probate and allow successors to manage affairs if something happens to the grantor, an irrevocable trust is used mainly just for asset protection, but is sometimes also used for estate tax avoidance.
There are two types of irrevocable trusts: living and testamentary. The living trust takes effect as soon as it's created, which means it's irrevocable as soon as the trust gains ownership of the assets. On the other hand, a testamentary trust becomes irrevocable only once the grantor has died, and the terms can be changed by the grantor up until that point.
When created properly, irrevocable trusts can save you money, reduce taxes, and protect assets. You should work with an experienced attorney and be clear about your wishes for your assets and your family's goals for the future.
Would you like to know more and don't know who to talk to? Give our Crossville, Tennessee office a call today at 931-250-8585 to schedule a consultation.