What Is the Purpose of an Irrevocable Living Trust?

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An irrevocable living trust is otherwise commonly referred to as an asset protection trust. So as the name suggests, this is an important estate planning tool to preserve your assets for the sake of your named beneficiaries’ inheritances. Continue reading to learn the purpose behind an irrevocable living trust and how an experienced Putnam County trusts attorney at the Law Office of Andres D. Gil, PLLC can help you weigh its advantages and disadvantages against other estate planning tools.

What is the primary purpose of an irrevocable living trust?

Essentially, an irrevocable living trust has you transfer your authoritative rights over certain assets to the trust. Once you do so, you may not modify, amend, or terminate these assets of the trust’s terms and conditions without the official permission of your named beneficiaries.

These may seem like drastic measures, but their purpose is that you are no longer considered the legal owner of these assets. In this way, these assets may be protected from federal and state estate tax implications; bankruptcy, divorce, or civil lawsuit proceedings; out-of-pocket medical expenses; and any other infringing activities from outside, third parties. In other words, this sacrifice during your lifetime may allow you to leave behind a greater financial legacy for your beneficiaries to profit from upon your unfortunate passing.

How is this different from a revocable living trust?

The key difference between an irrevocable and revocable living trust is that the latter offers you more control throughout your lifetime. That is, you may change the terms and conditions of your revocable living trust at any time. This may mean adding and removing certain beneficiaries, adding and removing certain successor trustees, and modifying when and how asset distributions are to happen, among other things.

However, with being given more control with a revocable living trust, you must sacrifice certain asset protections allotted with an irrevocable living trust. Meaning that you may not be protected from certain tax implications, legal proceedings, medical costs, and more.

How is this different from a will?

You must understand that it can be quite costly to draft and establish either an irrevocable or revocable living trust. Once you do, it may be even more costly, along with all the more complex, to rewrite or undo it.

So, if you prefer a simpler and most cost-effective approach to your estate plan, you may sooner consider a Last Will and Testament. A Will may simply instruct the assets in your possession that you wish to distribute to your named beneficiaries upon your unfortunate passing. Such distribution may be handled by the New York State Surrogate’s Court when the time comes. But in the meantime, there is no need to transfer these assets or have another person manage them.

When in doubt, someone at the Law Office of Andres D. Gil, PLLC will look into your case. So please retain the legal services of a skilled Putnam County estate planning attorney today.

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