Should I Move Property into an Irrevocable Trust for Asset Protection?
An irrevocable trust is another one of many options to consider when it comes to estate planning. Unlike a regular trust where you can make changes while you are living, you generally cannot make any changes to an irrevocable trust once it is set in place. Think of it as essentially giving up control of that property or asset once the irrevocable trust has been finalized. It is no longer yours and you no longer have the same abilities you had previously. Whatever was designated in this type of trust now belongs to the trust itself.
How Does an Irrevocable Trust Work?
As the grantor, you will designate a trustee and a beneficiary. When you put your assets into an irrevocable trust, you forego a myriad of ownership rights. Those assets now belong to the trust until your death. Upon an occurrence you suggest, the trustee will manage the trust and make sure your beneficiaries receive what you sat aside for them.
What are the Benefits?
There are several advantages to having an irrevocable trust:
- No one can usually touch these assets in the event of a lawsuit, as long as the trust was created before the lawsuit was filed.
- The assets no longer have any influence on your wealth or tax liability.
- It provides you asset protection from creditors coming after you in the future.
- It could help you meet the requirement for health care programs.
- This type of trust is protected from Medi-Cal estate recovery.
Are There Any Disadvantages?
- Making any kind of change to an irrevocable trust is difficult.
- Rare changes can be made, but it will be a lengthy process and you should expect expensive fees.
- You cannot usually rename beneficiaries.
Who Should Get an Irrevocable Trust?
This is a good option for the very wealthy. If this is you, an irrevocable trust could be a great way to lower your taxable estate. This is also a great option if you have a disabled dependent under your care. Lastly, this is a smart option for anyone who is in a high-risk business. If you fear you might be sued in the near future, and you want asset protection, this is one easy way to get it.
There are plenty of options out there for estate planning. Contact us today at Aliav Law to discuss your specific needs so that we can help you make the best decision for your future. Don’t wait until it’s too late. Reach out now while life is calm so that you already have the best defense before you actually need it.
Your next step is to join our facebook group called “Parents Protecting Assets in California”. We provide valuable information on protecting assets from future in-laws and creditors!