When creating an estate plan, it's imperative to understand the finer details of each strategy. Although you may not use every tactic available to you, it's a good idea to consider each and every one.
An irrevocable trust is something that is often overlooked. There are many reasons for this, including the fact that some people are confused about what it can do for them.
As the name suggests, an irrevocable trust is a document that cannot be changed, modified, altered or revoked after it is created. Once an irrevocable trust is created and property is transferred into the trust, nobody can take the property back out. This even holds true for the person who created the trust.
Although this is a big decision, as you are unable to "take back" anything that you transfer into an irrevocable trust, there are many benefits of this estate planning arrangement.
For example, an irrevocable trust allows your assets to avoid probate upon your death. This can save your family a lot of time and money. Along with this, it provides an added layer of protection, as the transactions associated with an irrevocable trust after your death are kept private.
If nothing else, you should learn more about an irrevocable trust. From there, you can compare the pros and cons to your other options, such as a revocable trust and will. Only then can you make a final decision as to what you should and should not be doing. With the right knowledge, you can make estate planning choices with a high level of confidence.
Source: FindLaw, "Types of Trusts," accessed April 20, 2017