Avoiding Probate: Irrevocable Trusts
What are the benefits of an irrevocable trust?
Irrevocable trusts are a common tool in modern estate planning, as they provide an effective means of passing wealth to heirs. When an estate is divided among successors according to the directives of a will or following the legal principles of intestate succession, the financial assets are exposed to taxation at rates which commonly exceed 35%. By establishing an irrevocable trust, you can preserve a larger percentage of your total estate for your family to enjoy when you have passed.
The laws surrounding trusts are highly complex and are designed to prevent any abuse by the public. There are limitations and rules governing how much you can place in the trust per year without incurring tax penalties and it is important that you are well-informed about this process so that you can avoid any of the common mistakes made by individuals when creating trusts.
Any amounts that you transfer into the fund will also reduce the taxable portion of your estate during your lifetime, which can further protect your wealth from taxation. The funds in the trust will be available to the beneficiaries according to whatever schedule you set, meaning that your heirs will not receive a lump-sum gift all at once. The distribution of assets will not be held up by probate, and those assets will be beyond the claims of creditors with claims against your estate.
The Difference Between a Revocable Trust & Irrevocable Trust in Baton Rouge
Once an irrevocable trust has been created, it cannot be changed or revoked. Neither the beneficiary, the trustee nor the person who created the trust will be able to alter anything so it is important that legal representation is sought before creating this document. A revocable trust, or a living trust, allows the trustor to place funds or property in a trust account but allows them to reserve the right to change the terms or completely annul it. As both types of trusts have different benefits and disadvantages, it is recommended that you discuss your case with a Baton Rouge estate planning lawyer to learn which is better in your unique situation.
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