Creating an estate plan is a major undertaking for most people, not necessarily because it’s a lot of work but because the decision-making process itself is so consequential. There are several things that should be included in an estate plan.
People who have assets they want to pass down to their heirs may be tempted to simply list those assets and the person who should receive it in the will. The downside to this approach is that the will likely must pass through probate.
There’s another option to consider – trusts. These are categorized as either revocable or irrevocable. There are certain benefits to consider if you’re thinking about including an irrevocable trust into your estate plan.
Protection from creditors
One of the most attractive benefits of irrevocable trusts is that they offer protection from creditor claims against you. Because you don’t have control over the assets and can’t change the terms of the trust, creditors can’t touch the contents of the trust once it’s funded.
Privacy after your death
The terms of the irrevocable trust don’t have to go through probate, so your heirs can have more privacy than if the assets were handed down through a will. The terms of the trust won’t be made public unless the heirs decide they want to make them known.
Example
Several different types of trusts fall in the category of irrevocable trusts. One of these is the special needs trust. This enables you to care for someone who relies on needs-based programs to get the care and assistance they need without compromising their eligibility for benefits. The trustee of the trust can use the contents of trust to take care of very specific needs, which don’t include those covered by the needs-based programs.
Trusts are only one part of a comprehensive estate plan. Seeking legal guidance to craft a plan that reflects your unique needs and circumstances can be very helpful.
