An irrevocable trust provides you with a secure provision for assets as part of your estate plan. Unlike a revocable trust which you can modify as necessary, you cannot modify assets in an irrevocable trust.
There are advantages to an irrevocable trust as part of your estate plan.
Protects your assets
When you place assets into an irrevocable trust, you transfer ownership of those assets to the trust. Since you no longer own those assets, it protects them from any potential lawsuits or claims against your net worth.
Preserves your benefit eligibility
Some forms of medical assistance, such as Medicaid, have resource limits for eligibility. Medicare often excludes long-term care costs, so managing your resources may help you qualify for Medicaid to cover those expenses.
Sets clear expectations
The assets placed in an irrevocable trust remain secure until modified by a beneficiary of the trust. Once you establish your trust, that sets clear expectations for the named beneficiaries to know what they stand to inherit. This makes it easier for them to plan for the future and prepare for any potential tax implications.
Keeps assets out of probate
Probate involves the assessment of your estate and the assets belonging to that estate. Any assets placed in an irrevocable trust no longer qualify, which keeps those assets out of the probate process and off the court records.
An irrevocable trust offers a variety of benefits in estate plans. Consider these facts when creating the estate plan you need so you can decide if an irrevocable trust is right for you.