You’ve worked hard and saved money for many years so you can enjoy your retirement and leave your loved ones and inheritance. Without the right plan in place, a significant portion of your hard-earned money could go to paying estate taxes and court fees. Creating an irrevocable trust is one of the best ways to protect your assets. An irrevocable trust can also help you qualify for Medicaid should you need long-term care in the future.
Discuss Your Estate Plans With an Experienced Lawyer
At Palmer & Slay, PLLC, we have helped many Mississippi residents use irrevocable trusts effectively to meet their retirement and estate planning goals. Whatever your current situation, we can help you properly structure your estate should prepare for the future. We are well-versed in all of the best strategies to protect assets, and after learning about your goals, we will provide you with skilled legal guidance regarding your estate plan. Contact us today to schedule your initial consultation with one of our experienced estate planning lawyers.
Irrevocable Trusts: The Basics
More people than ever are using trust-based estate plans. A trust is a legal instrument you can use to hold and protect your property and assets. You can also direct how you would like the assets in your trust to be distributed after you pass away. Trusts are foundational documents for estate planning. Trusts are unique because they are separate entities in the same way corporations are considered separate legal entities. When you create a trust, you have more flexibility and control over what happens to your money than if you make a last will and testament.
The creation of a trust involves a trustor or grantor. The trustor is the person who initiates the trust, transfers his or her property into the trust, and signs the trust agreement. The trustee is the person who manages the trust. Finally, the beneficiary is the person or organization that receives the proceeds of the trust. When you create a trust, you will transfer ownership of the assets into the name of the trust. If you would like the trust to own real estate, you’ll need to deed the real estate to the trust.
What Makes an Irrevocable Trust Unique?
There are many different types of trust, and each type of trust serves a specific purpose in estate planning. The revocable living trust is the most popular type of trust. In a revocable trust, the grantor has the power to change the trust, sell the property owned by the trust, and give gifts from the trust without any restrictions. The primary purpose of a revocable trust is to avoid the probate process and maintain control over the assets in the trust.
On the contrary, when you create an irrevocable trust, you will relinquish the control of your assets in the trust. You will not be able to change the terms of the trust agreement once you create the trust. Creating an irrevocable trust may seem intimidating because you will be giving up some of the control of your assets. However, there are certain benefits that you can only obtain through an irrevocable trust.
For example, when you transfer assets into an irrevocable trust, you may be able to reduce your tax liability and protect specific interests of a party, such as a child with a disability. An irrevocable trust will protect assets from creditors, including those from personal injury lawsuits. We will discuss some of the different types of irrevocable trust in the purposes they serve.
Irrevocable Living Trust
An irrevocable living trust is created during the trustor’s lifetime. This type of irrevocable trust is designed to protect the trustor’s assets and general income. If you create an irrevocable living trust, you will also designate who will receive the assets in a trust upon your death.
Irrevocable Life Insurance Trust
An irrevocable life insurance trust owns the proceeds of your life insurance policy. When you pass away, the proceeds from your life insurance policy will transfer into the trust. You can avoid certain types of state taxes by creating an irrevocable life insurance trust. Doing so will also ensure that your loved ones will have access to the life insurance proceeds quickly, and that will protect the proceeds from creditors.
Special Needs Trust
If you have a child with special needs, you may be concerned about how they will survive after you pass away. When you create a special needs trust, you can provide income for your loved one with special needs. At the same time, you can ensure that they will continue to qualify for federal benefits such as Medicare and other housing benefits. With a properly structured special needs trust, the income in the trust will not count towards your loved one’s overall income, allowing them to continue to qualify for the benefits they need.
Asset Protection Trust
An asset protection trust will help you protect your assets from certain types of creditors. If you’re in a high-risk profession, such as medicine, the legal field, or any other profession in which you’re concerned about lawsuits, creating an asset protection trust can help you avoid losing your assets due to a legal judgment against you.
Charitable Remainder Trust
This type of process allows the trustor to transfer assets into the trust while enjoying income from the trust. The trustee will manage the assets in a way that generates interest. The trustor can withdraw money to live on from the trust during his or her lifetime. When the trustor passes away, the assets in the trust will be distributed to a charitable organization chosen by the trustor.
Contact an Irrevocable Trust Lawyer in Mississippi
Are you concerned that creditors or taxes could take your hard-earned income? Do you have a child with special needs? Creating an irrevocable trust could be an effective tool to protect your assets. One of the skilled irrevocable trust lawyers at Palmer & Slay, PLLC can help you understand the benefits of an irrevocable trust. We will assist you in setting up an irrevocable trust, and establish financial security for you and your loved ones. Contact our Mississippi estate planning firm today to schedule your initial consultation.