Irrevocable trusts are a particularly popular way to avoid probate. A San Antonio trusts planning attorney can help you create an irrevocable trust. An irrevocable trust is one where the settlor can’t change, revoke, or terminate it. With an irrevocable trust, the assets are not changed and you maintain control over those assets for as long as you live.
There is no doubt that they are beneficial in the sense that they allow heirs to avoid court proceedings and potential burdensome expenses, but there are also a few drawbacks associated with them. This article will discuss the three main benefits of irrevocable trusts.
- Minimizes the burden of estate taxes
Estate taxes are a significant burden to the heirs of deceased persons. These taxes are a percentage of the value of an estate and can reach up to 55%. This burden can be reduced if assets are put into irrevocable trusts rather than probate.
Irrevocable trusts, however, can allow assets to be passed on to heirs without being subject to any taxes. If the assets are transferred in an irrevocable trust, they are not considered an asset of the deceased person’s estate and thus do not need to be reported or taxed.
- Help those with disabilities qualify for government benefits
Disabled individuals who qualify for government benefits need to meet certain criteria in order to receive them. One of the main requirements is that their assets need to be below a certain amount.
Irrevocable trusts help these individuals get the health care and disability payments they need. Because the assets are not considered assets of the deceased person’s estate, they are not subject to taxes in probate or count against the individual’s government benefits.
- Protect your assets from lawsuits
If your assets are in a trust, your entire assets are frozen. This means that any lawsuits against you can’t cause harm to the assets. If this happens, the lawsuit will be dismissed because it is invalid. Any money or property that the court can take is immediately given back to you and you will have no obligation to pay anything else. Irrevocable trusts are a great way to protect your assets, but it is important to understand that this protection doesn’t extend to all assets. There are certain assets that will be considered part of the deceased person’s estate even though they are in an irrevocable trust.