You’ve worked hard to build your wealth and legacy, and you want to pass on as much of it as possible to the people and causes that matter most to you. However, you’re probably concerned about how claims by creditors, the Massachusetts probate process, and estate taxes could take a big bite out of your estate. An irrevocable trust could help you protect your wealth from these risks so that you can leave more of it to your heirs.
Attorney Patricia Bloom-McDonald has over 30 years of legal experience guiding clients through complex estate planning challenges. We can review your legal options, find the right tools for your goals, and draft the documents so that they are legally sound and financially effective. Our firm can also update your trust or estate plan as your goals or family situation changes. Call The Law Offices of Patricia Bloom-McDonald located in Westport, MA now or complete our contact form for a consultation with an irrevocable trust lawyer in Westport, MA.
What Is a Trust?
A trust is a legal instrument that empowers someone to protect and manage assets for another party’s benefit. Here’s how a trust works:
- The person who creates the trust, known as the grantor, places assets into the trust. These assets can include money, property, jewelry, or other items of value.
- The assets in the trust are overseen by a party called a trustee according to instructions established by the grantor. Depending on the type of trust, the trustee may be the grantor themselves or a legally distinct other party.
- The trustee manages the trust for the benefit of the third parties named by the grantor, known as beneficiaries. Beneficiaries might include family members, friends, charitable organizations, or even the grantor themselves.
What Trusts Can Do
Trusts have many powerful estate planning benefits. First, assets in a trust don’t go through probate, which is the formal legal process of proving a deceased’s Last Will and Testament and distributing assets from their estate. Probate costs can add up quickly, and the process can take some time. Furthermore, probate is a public court process. The right trust helps you pass on more of your estate to your heirs, avoids the lengthy probate process, and keeps your affairs out of the public eye.
Another key benefit of trusts is that they can provide greater control over how and when you want to distribute your estate to your heirs. For example, the terms of a trust could reserve certain assets to pay for your children’s or grandchildren’s education. As another example, the terms of your trust could state that trust assets could only be distributed to your beneficiaries once they reach a certain age.
A trust can also reduce the size of your estate and, therefore, your estate taxes. If the trust is set up so that you do not have control of the assets within it, those assets are no longer part of your estate, and they are therefore not subject to estate taxes. This arrangement lets you pass more of your estate to your beneficiaries.
What Is an Irrevocable Trust?
An irrevocable trust is a specific type of trust that generally cannot be changed or modified after its creation. Once you place assets into the trust, you give up control of those arrests to the trustee.
The biggest advantage of an irrevocable trust is that since you can’t control the assets, they no longer count toward your estate. That means those assets can’t be seized by creditors or through lawsuits, and they don’t count toward federal or state estate taxes.
An irrevocable trust must be carefully drafted in order for it to be effective. If you don’t get help from an experienced estate planning lawyer, you put everything that you’ve worked so hard to achieve at risk.
Who Can Benefit from an Irrevocable Trust?
Some people or families who can benefit from creating an irrevocable trust include:
- People or families with large estates – If you have significant wealth and want to help your heirs avoid state and federal estate taxes, you can create a trust to reduce your estate and pass on more of your wealth to your heirs.
- People in high-risk professions – Doctors, lawyers, and other professionals who often face legal claims can establish a trust to protect some or all of their estate from lawsuits.
- People looking to preserve Medicaid eligibility – People applying for Medicaid must meet strict income guidelines to receive benefits. Families or individuals looking to maintain eligibility for Medicaid benefits can create a trust to provide more resources to someone with a severe illness or disability while staying eligible for government assistance.
- Parents of children with special needs – A special needs trust, which is a particular type of irrevocable trust, can provide financial support for a child with a disability while helping them maintain eligibility for government benefits.
- People looking for greater control over distributing their estate – People with large estates often worry that their children or other heirs won’t spend their inheritance wisely. A trust can give parents or grandparents greater control over when their heirs receive their inheritance, which can help beneficiaries avoid misspending or other financial problems.
Can You Modify an Irrevocable Trust?
Life is impossible to predict, and people who create irrevocable trusts sometimes find that their needs or goals change. It’s possible, though difficult, to modify an irrevocable trust under these circumstances. In some cases, a trust can be modified if its beneficiaries and trustee collectively agree on the change. It’s also possible to transfer assets from an old trust into a new one, though there are complicated rules involved in this strategy. Finally, a grantor, trustee, or beneficiary can petition the courts to modify a trust, though they must show that the current trust no longer meets its intended purpose.
Contact a Westport Irrevocable Trust Lawyer Now
An irrevocable trust is a powerful estate planning tool, but only when it is drafted effectively. The Law Offices of Patricia Bloom-McDonald can advise you on whether an irrevocable trust meets your estate planning needs, then create the relevant documents on your behalf. Call now or complete our contact form for a consultation with an irrevocable trust lawyer in Massachusetts, and let’s discuss your goals and concerns together.