An irrevocable trust is a specific type of trust that generally cannot be changed or terminated once it has been created, except in very limited circumstances.
This differs from a revocable trust, which can be changed or terminated by the Grantor—the person who creates the trust—and only becomes irrevocable upon the Grantor’s death.
How Does an Irrevocable Trust Work?
An irrevocable trust is treated as its own legal entity. When creating the trust, the Grantor relinquishes or gives up control of the assets placed within it.
Assets transferred into an irrevocable trust are titled in the trust’s name. The trust owns and governs those assets and outlines how both the assets and any income are to be distributed now and in the future.
Irrevocable trusts can be complex and may be structured to span several generations.
What Are the Benefits of an Irrevocable Trust?
Depending on the circumstances, an irrevocable trust can provide several potential benefits, including:
- Minimizing inheritance tax
- Protecting assets from creditors
- Providing for the long-term care of a child or disabled loved one
Is an Irrevocable Trust Right for Your Estate Plan?
Whether you are considering a revocable or irrevocable trust as part of your estate planning, it is important to discuss your specific circumstances with an experienced estate planning attorney.
The right estate plan should be designed to help ensure your wishes and desires are accomplished.
Bononi & Company would be happy to discuss your estate planning needs with you. If you have questions about irrevocable trusts or any estate law matter, please call Bononi & Company at 724-832-2499.