A trust is a legal place where you put assets. You, the person who owns the assets and puts them into the trust is called a grantor or trustor. Then, you appoint a trustee who will look after the assets and distribute them as necessary. Finally, you choose one or more beneficiaries, how and when they will receive assets.
An irrevocable trust is generally what it sounds like: a trust that cannot be modified or revoked after its creation. Once you put your assets in an irrevocable trust, they are no longer in your name and you do not have ownership of them. Rather, the trust will own them.
Looking at the pros
- Your assets in the trust do not go through probate after you pass
- It protects assets from some taxes
- It protects assets from creditors
- It preserves your assets for your beneficiaries
- You can determine what happens to your assets
Considering the cons
- You cannot change or cancel the irrevocable trust once it is created
- You cannot take assets out or use them to pay for things once they are in the trust
- You cannot change the beneficiary or trustee
Is an irrevocable trust right for you?
Irrevocable trusts are typically most beneficial to those with large estates, though just about anyone can make one. It can be best if you know what you would like to do with your assets and are confident that you do not want anyone to make changes to them or will need to access them aside from your beneficiary.
To really determine if an irrevocable trust is best for you, talk with your estate planning lawyer. They will be able to take an in-depth look at your estate and help you consider how a trust will affect your future.