Are you in the process of estate planning and want to know more about an irrevocable trust? If so, it can be a great tool that can benefit how your assets are passed on. As you acquire assets over your life, you have the option to move them into an irrevocable trust. These are assets that you can continue to use, even if you do not officially own them while they are part of the trust. Here's what you need to know about using an irrevocable trust.
An irrevocable trust essentially means that you are giving up ownership of the assets. Therefore, it also protects you from creditors since they cannot go after those assets. For example, if your home is placed in an irrevocable trust, you can continue living in the home even though it technically does not belong to you. You won't have to worry about a creditor going after your home if you owe money, since it belongs to the trust.
While the assets that are in an irrevocable trust do not belong to you, it is still possible to generate income on these assets for the rest of your life. You'll really see the benefit of this with rental property, which you can continue to receive rental income from while the property is in the trust. Stocks can also generate an income as well, with you being able to receive dividends for stocks in an irrevocable trust.
Stop-Loss On Your Assets
Assets that are in an irrevocable trust cannot be taken away from you in certain situations. A common example is if you have to go into a nursing home; the home that you own would be protected since it is owned by the trust. There are exceptions to this rule though, since you cannot put assets into an irrevocable trust if you see certain situations coming up in the near future. For example, if you plan on going into a nursing home, you cannot start putting assets into your irrevocable trust.
Terms Cannot Be Changed
The reason that all of these benefits exist is because an irrevocable trust cannot be changed. This means you cannot change your mind and take assets out of the trust at a later date or change who has access to the items that are in the trust. As the name implies, the trust is irrevocable.
To learn more, contact a wills and trusts lawyer in your area.