What to consider before creating an irrevocable trust

| May 28, 2021 | Estate planning |

When properly structured, a California judge will likely recognize the validity of an irrevocable trust. Generally speaking, this type of document is used to protect assets from being seized by creditors or from being lost in a divorce settlement. It’s also common for people to use an irrevocable trust to make gifts to beneficiaries throughout their lifetimes.

Is an irrevocable trust right for you?

It’s important to note that you essentially lose control of any assets that are placed in this type of trust. This is because it is overseen by an independent trustee, and the document itself usually can’t be dissolved unless all of the beneficiaries agree to do so. In some cases, a judge may have to give its blessing for this to happen. You will also need to determine if you can afford to create and maintain this type of document. An estate planning attorney may be able to talk more about whether an irrevocable trust is appropriate to meet your needs.

Are you simply looking to avoid probate?

If you’re simply looking for a way to avoid probate, it may be in your best interest to use a revocable living trust. A revocable trust may also be appropriate if you don’t plan on making gifts while you’re still alive. Finally, if you want to retain control over property held outside of your estate, you will want the flexibility that comes with a living trust. It’s worth noting that a living trust becomes an irrevocable trust after you pass. Therefore, you should review the document on a regular basis to ensure that it’s structured in a manner that best reflects your true wishes.