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What are irrevocable trusts?

On Behalf of | Jan 31, 2023 | Estate Planning

For those later in life, hopefully, you already have started your estate plan. It is not only extremely important for your beneficiaries and heirs but also for your end-of-life wishes and your health care needs. One such estate planning tool that can be used for your health care needs is an irrevocable trust. They can be used to access New York metro area government benefits, in addition to protecting your assets and minimizing taxes.

The structure

In their basic form, irrevocable trusts remove assets from your name and move them into the trusts’ name, which means you no longer owe taxes on them. This also means that they no longer qualify as your assets when you look to qualify for government benefits and assistance that have means testing. These assets can include life insurance policies, cash, businesses, investments, real estates, etc.

Asset protection

In addition to protection from taxes and qualifying for government benefits, irrevocable trusts also offer asset protection. This means that they offer protection from lawsuits. Once the assets belong to the trust, they are safe from judgment from New York, New York, creditors and attachments from lawsuits.

Living trusts

A living trust (also known as an inter vivos trust) is a form of irrevocable trust known as a living trust because it is funded during your lifetime. This is generally done to ensure that you can qualify for government benefits during your lifetime. And, examples include irrevocable life insurance trusts, grantor-retained annuity trusts, spousal lifetime access trusts, qualified personal residence trusts, charitable remainder trusts, charitable lead trusts, etc.

Testamentary trusts

Testamentary trusts are another type of irrevocable trust. These types of New York, New York, trusts are created after you pass, and they are funded from your estate based on your estate plan. The only way to change it is to change or cancel the testamentary trust document in your estate plan before you die.

Complicated, but necessary

As you age, an irrevocable trust can become a vital part of your New York metro area estate plan. However, the legal requirements vary by state, which means that you usually need an estate plan attorney to ensure that they are legally enforceable.