Estate plans can have different elements depending on the needs of each person. You and many other Georgia residents may be wary of using certain estate planning tools because you do not fully understand how they can be used or the details of their uses. Fortunately, having the right information could allow you to utilize beneficial tools that can help you create the most comprehensive plan possible.
For example, you may hear the term “irrevocable trust” and think it sounds intimidating. You may not think that you need any type of trust, let alone one that you cannot change. However, an irrevocable trust can have its uses, and you do not have to have substantial wealth to maximize its benefits.
Why use an irrevocable trust?
As mentioned, an irrevocable trust cannot be changed. Additionally, after you place the assets into the trust, they are no longer part of your estate, and you do not have control over them. However, placing assets into this type of trust can have its benefits because the removal of the assets from the estate and from your control can lower your tax obligation.
Additionally, the removal of the assets from your estate means that creditors cannot attempt to claim those assets in efforts to pay off a debt. The same goes for any court judgments against you that require you to pay some type of compensation. The assets in the trust technically no longer belong to you, and as a result, they cannot be sold to pay your debts.
Which irrevocable trust could you use?
Different types of trusts also have different subsets. As a result, you could take advantage of any of the following types of irrevocable trusts:
- Irrevocable marital trust, which you could use to ensure that your spouse receives the entirety of your remaining estate
- Irrevocable charitable trust, which allows you to make charitable donations to your chosen organizations
- Irrevocable life insurance trust, which could allow your life insurance payout to pass directly into a trust rather than to a specific beneficiary or to your estate
Understanding irrevocable trusts more fully could allow you to see just how useful such a tool could be to your estate plan. If you are interested in using this planning option, you may wish to discuss your available options with a knowledgeable attorney.