Once an irrevocable trust has been finalized it cannot be terminated, whether that occurs upon the grantor’s death or during their life. Set up with the help of a trust and probate attorney, trust account rules state that once property is placed into an irrevocable trust account it cannot be retrieved by the grantor.
A revocable trust offers some of the best flexibility for trust administration, allowing people to make changes and amendments as necessary throughout the duration of the trust. Why, then, would someone choose to establish an irrevocable trust, which has much more stringent rules?
There are a few benefits to selecting an irrevocable trust. One property is in an irrevocable trust it is no longer part of the grantor’s estate, so this trust administration setup can actually reduce taxes as it reduces the overall estate value. Because the assets essentially belong to the trust, not the grantor, it will not be subject to taxation.
There is also something to consider when it comes to trust and probate — an irrevocable trust is one way to potentially avoid the probate process.
Using an attorney with trust account rules knowledge you can also use irrevocable trusts to set up long-term plans. If you want to ensure continued support for someone, or protect assets into the future, an irrevocable trust is a way to set up an extended payment schedule or protect property from creditors. An attorney experienced in trust administration can guide you through the decision-making process, if you are considering an irrevocable trust for these reasons or similar factors.
To set up an irrevocable trust you certainly need to have confidence in your situation, your attorney, and the person you have selected to be your trustee, as you cannot easily regain control over an irrevocable trust once it is finalized.
Because of this, it is important to select a qualified and competent trust and probate attorney who can help you explore the pros and cons of irrevocable trusts versus revocable trusts, or other trust administration options. You most certainly will want to have all of the details possible when making this type of financial decision, especially if you go down the path of selecting an irrevocable trust to manage your assets. There are many reasons to do so, but you should be fully informed.