An irrevocable trust is a great estate planning tool. When you decide to strategize your estate plan, your estate planning attorney might recommend setting up a trust. A trust establishes a relationship where one party (the trustor) gives another party (the trustee) the right to hold assets for the benefit of a third party (the beneficiary).
There can be advantages to placing your assets in a trust. A trust can provide additional income to your beneficiaries and is a great toll used to avoid probate. A trust can also protect your assets but the level of protection depends on the particular trust that you have.
What Types Of Trusts Are There In Oklahoma?
You can choose to put your assets in revocable or irrevocable trusts in Oklahoma. While a revocable trust might seem like the best choice for some estates its important to know what exactly you want your trust to accomplish. In some situations a revocable trust may be best for you. If its easy access to your assets in the trust you want than a revocable living trust might be best. On the other hand, if its asset protection you need than something like an irrevocable trust is more important to you.
Differences Between Types of Trusts
Understanding the differences between an irrevocable and a revocable trust it helpful when deciding what kind of trust is best for your estate. In a revocable trust, the trust can be undone at any time. You are also still in control of the assets in the trust. This control is absolute and includes changing beneficiaries at will and even dissolving the trust and taking back all the assets that you put in the trust. People use this kind of trust structure for many reasons and even put assets like their business in this kind of trust.
However, in a irrevocable trusts, you can no longer manage the assets kept in the trust. You are no longer considered the owner of those assets placed in the irrevocable trust. A trustee is appointed for an irrevocable trust to take charge of the assets and manage them according to the instructions found in the trust itself. . Although there are some provisions in state law that may allow you to rescind an irrevocable trust those powers are very limited in scope.
What Are The Benefits Of An Irrevocable Trust?
Even though an irrevocable trust prevents you from handling your assets, there are benefits to choosing an irrevocable trust over a revocable one. In fact, its the act of placing the trust assets beyond your control that gives you the asset protection or other benefit you are seeking.
Tax Benefits Of An Irrevocable Trust
In an irrevocable trust, the trust, instead of the beneficiaries, pays taxes on earned income. There are also no estate taxes under an irrevocable trust. Any assets placed in an irrevocable trust cannot be taxed as part of your estate. This is vital to think about in estate planning as it can be used to reduce your tax liability. For some people who die with assets that exceed the standard deduction placing the assets in the trust is very helpful. By not owning the assets at death the trust creator lowers the taxable value of gifts they are passing to their heirs.
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Healthcare Benefits With An Irrevocable Trust
When your assets go into an irrevocable trust, they are no longer considered part of your estate. Because of this, your overall net worth can be reduced. This can qualify you for health benefits you might not have been able to receive otherwise. An important thing to consider about this kind of trust is that it must be created well in advance of your sickness or incapacity. Depending on your situation there is a look back period that either protects the asset or doesn’t.
An Irrevocable Trust Can Protect Your Assets
Because your assets in irrevocable trusts are no longer considered part of your estate, they are protected from your creditors. Once you set up your trust, creditors can no longer go after your assets. The fact they are not owned by you personally is the basis for that protection. This kind of trust keeps your assets safe for your heirs and protects them from being taken by your creditors. But, once again, when the trust is created and what your intent was when you created the trust is important in deterring the depth of your asset protection.
Tulsa Estate Planning Lawyers
As part of your estate planning process, finding an Oklahoma lawyer who understands asset protection is an important step. Its important the estate planning attorney is able to sit down with you and help you get a full look at your options given your particular goals.
.At Kania Law Office, our experienced Tulsa estate planning attorneys will consult with you regarding your unique concerns. Our firm’s Oklahoma lawyers know the ins and outs of estate planning and are here to share their knowledge with you. For more information, call us at 918-743-2233 or contact us online.