It is not unusual for estate planning to slightly put some people off. After all, there are often a lot of documents involved, and Florida residents will have to provide a great deal of personal information if they want their plans to be comprehensive and accurate. Still, you know the importance of having your affairs in order and that you and your family could benefit from that organization in the future.
Because you want to plan as thoroughly as possible, you may want to go beyond just having a will and a health care directive. You also want to implement trusts as part of your plan. Moving in this direction can certainly be wise, but you may wonder if an irrevocable trust is right for you.
Do any of these scenarios fit?
An irrevocable trust is one that you cannot change later. As a result, you should not take the decision to create one lightly because you will have to live with the terms. However, because you cannot change the terms and because the assets you place in that trust are removed from your ownership, irrevocable trusts offer a considerable amount of asset protection. If any of the following scenarios apply to you, utilizing this type of trust may be a good idea:
- You may need to qualify for Medicaid or other government benefits later. It is common for elderly individuals to need long-term care, and if you want to plan for that situation, having assets in an irrevocable trust could better ensure that you meet financial qualifications for certain government benefits.
- You could also benefit from having this type of trust if you have a considerable amount of debt or could face an unfavorable lawsuit outcome that leaves you owing another party compensation. Assets in an irrevocable trust are essentially out of your reach and, fortunately, out of the reach of creditors as well.
- If you have a considerable amount of wealth and are concerned about the government collecting estate taxes, moving some of your assets into an irrevocable trust could allow you to lower the value of your taxable estate, which could lower or remove the need for estate taxes.
Of course, each person’s situation and estate is different. You may have another reason for wanting to use an irrevocable trust that is completely valid. If so, you may want to go over your reason with an experienced estate planning attorney who could help you decide on the best planning tools for your circumstances.