Irrevocable trusts are one sort of trust. Unlike revocable trusts, irrevocable trusts can only be changed or terminated in certain limited circumstances. This is a significant distinguishing feature when considering revocable vs irrevocable trusts.
Irrevocable trusts are created for many reasons. They’re often used to reduce estate or income taxes, provide creditor protection, or influence beneficiaries. You can hold many kinds of assets in an irrevocable trust.
Your irrevocable trust attorney will elaborate on the pros and cons of an irrevocable trust and help you determine its fit for your needs.
Within this category of trusts, you’ll find a variety of types of irrevocable trusts. Examples of common include:
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It’s a kind of trust for which the terms can’t be changed by the person who created the trust. Assets in the trust are managed by a designated trustee on behalf of the beneficiaries.
It depends on the assets that are held in the trust.
There are several types of irrevocable trusts, including life insurance, family, charitable remainder, charitable lead, qualified personal residence, grantor retained annuity, and Medicaid trusts.
Many like the asset protection, tax benefits, and control over asset distribution that irrevocable trusts may offer. However, this kind of trust can be too inflexible, complex, and hands-off for some.
Each has its own profile of pros and cons, which can only be evaluated based on your goals. It’s worth discussing your personal situation with a qualified estate planning professional.
