subject: Determining Which Trust Serves Your Purpose Better [print this page] Knowing the basics of estate planning and management is essential. It is in this regard that you come across the particular estate-planning instrument called irrevocable trust. Before you get into the details, here is a concise overview of the type, who is eligible to start these trusts, how these operate, what are the pros and cons of these, and so on.
How do you define such a trust? The irrevocable trust, as opposed to revocable trust, is a trust in which the terms and conditions are not changeable as per the wishes of the trustee after the formation of the trust.
Who begins the trust? Any trust usually attains the status of an irrevocable trust with the death of the grantor, i.e. the maker of the trust. Any living individual may also choose to form such a trust for proper estate management.
Note: In case of multiple grantors or beneficiaries involved in a revocable trust, it becomes multiple irrevocable trusts with the decease of the trust maker. This is one of the special situations when this type of trust formation occurs.
What are the advantages of this type of trust? There are three major benefits of opting for this specific tool for estate management.
1. The chief advantage is that such a trust need not go through the extensive, complicated and expensive probate process as the will. In most cases, the court system is not even involved in the trust operations. Only when a dispute regarding this crops up, does the question of lawsuit arise.
2. The grantor as well as the beneficiaries does not have to bother about the estate taxes in case of an irrevocable trust. The assets of the trust are not within the tax limit. It is, therefore, a good option to consider when you want to avoid huge taxes.
3. No creditor may have access to the trust assets when this particular tool is in use. If your property is in such a trust, no creditor has the right to seize it in lieu of an unpaid loan. Even a lawsuit cannot give the creditor this right to seizure. You can also consult with a lawyer. Go through a lawyer directory and choose a good profile, with whom you can discuss.
Are there any exceptions to the irrevocability clause? By design, there are no ways to change the terms and conditions of the trust once it is formed. However, there are certain cases where an exception to this rule may occur. For example, the selling of the assets leads to the termination of the trust and therefore, nullifies the terms. The original trust may also have a protector who has the right to make changes.
