The benefits of an irrevocable trust

Many individuals find the estate planning process daunting. One reason is because it forces them to contemplate their own death. Others find that the various legal options available to them in the estate planning process are overwhelming. Yet, by learning more about how to engage in effective estate planning, individuals can better rest assured that their assets will be distributed according to their wishes upon death. This, in turn, can give peace of mind.One tool that is often utilized in estate planning is the irrevocable trust. This type of trust allows an individual to place assets in the trust for many reasons, including avoiding estate taxes. When assets are transferred to the trust, the trust’s creator loses all ownership. Since the trust is irrevocable, all actions are final and cannot be modified. However, an individual can place all kinds of restrictions and conditions upon the assets that are placed into the trust. These conditions and restrictions can dictate how assets will be used and under what conditions they can be distributed to beneficiaries.While an irrevocable trust carries tax benefits, these are not the only benefits available to those who utilize this type of trust. Another major benefit is the fact that an irrevocable trust can reduce an individual’s assets, thereby allowing him or her to qualify for certain government programs such as Medicaid. This means that the decision whether to utilize his trust is sometimes reduced to a cost-benefit analysis.An irrevocable trust is just one of many trusts available to those engaging in estate planning. Each trust type has its own advantages and disadvantages. Becoming familiar with each is the best way to ensure that one’s plan is holistic and in furtherance of his or her vision for the estate. Attorneys who are experienced in this field of law can help advise and guide individuals through these sometimes confusing legal waters.