Setting up a trust is a great way to start paring down your estate as part of an end of life plan. There are two types of trusts. In a revocable trust, assets stay in your estate, which can impact your federal tax obligation. Conversely, in an irrevocable trust, assets transfer to the beneficiary’s estate, with no further impact on your taxes. Your Algonquin trusts and estates lawyers can help determine which would work out best for your situation.
This trust gives you control over your assets up until your death. You can modify or change it at will. Revocable trusts can be in the name of a beneficiary or in your own name, and they help you avoid probate in the event of your death.
Benefits of a Revocable Trust
A revocable trust is a good solution for those with assets that don’t pose a great tax liability. Your Algonquin trusts and estates lawyers might recommend this type of trust if you are at risk of mental impairment due to age or illness, which can cause you to lose control over your property. If you develop Alzheimer’s, for example, this will let you designate a trustee to control your assets once you’re incapable of doing so.
Once an irrevocable trust is established, it can’t be undone, modified, or eliminated. Irrevocable trusts let you remove the value of assets from your estate, reducing your taxes and making the assets untouchable by creditors.
Benefits of an Irrevocable Trust
An irrevocable trust shields your assets from estate taxes because the ownership transfers to the trust and can’t be included in your property during estate valuation. When you die, your property and assets held in an irrevocable aren’t taxable.
Your Algonquin trusts and estates lawyers may recommend an irrevocable trust if you have significant debt since an irrevocable trust prevents creditors from liquidating your estate to recover a debt. It can also help you qualify for Medicaid, disability or other programs. As the grantor, you can change your trustees and beneficiaries even though the assets are no longer part of your estate.
Jackson Abdalla Law Group has experienced lawyers who are knowledgeable in estate planning. They can help you secure your property to avoid probate court and other delays in the settlement of your estate.
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