For many, estate planning is an overwhelming process that can often result in stress and feelings of uncertainty, as you may be unaware of your options. Typically, many people fail to realize that there are options other than creating a will, such as establishing an irrevocable trust. As such, the following blog explores what you should know about irrevocable trusts, including their benefits, whether or not they can be modified, and the importance of working with experienced Tampa trust lawyers to help you determine your legal options during these complicated matters.
What Is an Irrevocable Trust, and Can It Be Modified?
An irrevocable trust is a type of trust fund that, once it’s created, cannot be changed. This functions like a normal trust, by moving the assets from the estate of the creator, also known as the grantor, and into the name of the trust.
One of the primary benefits of creating an irrevocable trust fund is that you will have increased protection from creditors. This is because the assets, once transferred to the trust, become the property of the trust. As such, a creditor who wishes to sue you will not have access to these assets since they are no longer in your name. This differs from revocable trusts, as you are still in control of the assets because you retain ownership over them.
In addition, you’ll find that creating an irrevocable trust offers additional benefits, as you can use it to not only protect yourself and your beneficiaries from incurring estate taxes, but it can also assist you in qualifying for Medicaid. By moving assets from your estate to the trust, you relinquish control of the assets, meaning they will not count against you when applying for Medicaid. However, you should note that you must move the assets at least five years prior to applying in order for the assets not to count against you.
What If I Need to Make a Change?
As mentioned, an irrevocable trust cannot be changed once it has been created. However, there are very limited exceptions in these matters. Generally, the only way in which an irrevocable trust can be modified is by a unanimous agreement of all beneficiaries named in the trust, so long as the change does not directly contradict the material purpose of the trust.
Generally, the other option in which this kind of trust can be altered is through a trust protector. This is an individual who is granted additional power to make changes as necessary. In some instances, you can outline the extent of their powers in the trust, ranging from minor modifications to substantial changes.
Whether you are looking to establish an irrevocable trust or you have recently been named a beneficiary, it’s in your best interest to connect with an experienced estate planning attorney to assist you in these matters. At Tampa Law Group, our team understands how difficult these matters can be to navigate, which is why we will do everything in our power to help
