If you live in New York and are currently trying to determine the best way to preserve your wealth for your loved ones once you pass on, you may be considering establishing different forms of trusts as one method of doing so. While different types of trusts offer different benefits and drawbacks, you may be giving some thought to creating what is known as an irrevocable living trust, which many consider a solid, important estate planning strategy.
Per the Motley Fool, an irrevocable living trust, as the name implies, is one that you cannot change once you create it. While some might see the binding nature of an irrevocable trust as a negative, there are actually numerous benefits associated with this type of trust that for many, negate the main drawback.
For example, placing assets in an irrevocable trust effectively safeguards them from creditors, so if you go bankrupt, or if someone sues you, the money in the irrevocable trust stays safe and untouched. This differs from revocable living trusts, which offer considerably less legal protection.
Assets in irrevocable trusts also do not count toward the overall value of your estate, so, depending on how much money you place in the trust, you may realize a substantial savings on estate tax. In other words, money that would typically have to cover estate taxes after your passing instead goes directly to your beneficiaries. While these are some of the main benefits of irrevocable living trusts, please note that this is not an exhaustive list of all possible perks.
This information about irrevocable trusts is informative in nature and does not constitute legal advice.