Central Coast Law
How an Irrevocable Trust Can Play an Invaluable Role in Your Estate Plan
If you have concerns about distributing your assets and property to your loved ones per your exact wishes while minimizing your tax obligations, an irrevocable trust is a highly effective tool to do just that.
With an irrevocable trust, you would place a certain amount of your assets in the trust. Once you do that, you no longer technically own those assets—they belong to the trust. However, you may still retain a lot of control over what happens to that money in the short and long term. You cannot undo this transition of property, hence the name “irrevocable trust.”
For individuals who have a large amount of disposable assets or particularly valuable assets they want to make sure get passed down tax-free to their heirs, irrevocable trusts present an excellent option.
Working with an estate planning attorney you can realize a wide range of tax benefits from an irrevocable trust. It is the only form of trust guaranteed to completely avoid taxes, as the property no longer belongs to your estate.
To that end, individuals and couples who have estates valued above the Internal Revenue Service’s federal threshold can reduce that value through this strategy. They would only need to pay tax on the property at the time it gets deposited into the trust.
Not all trusts are private by nature. If you create a trust through your will or establish a trust so that it goes into effect only upon your death, the assets contained within it will still need to go through the probate process—which is completely public.
With an irrevocable trust, the courts are not involved at all. This privacy can be beneficial if there have been any conflicts within your family, or if there are potential conflicts you anticipate happening after your death. When you create an irrevocable trust, the only people who even have to know it exists are the original parties of that trust. This allows you to, for example, give a significant amount of your money to charity without your other beneficiaries finding out.
Using trusts to your advantage
Trusts are extremely useful estate planning tools if you have a large estate, are concerned that your heirs may have special needs, or if you own California real estate. There are many different types of trusts, and you will likely need to appoint a trustee who is responsible for distributing the trust’s assets after your passing.
Schedule Your Consultation with Our Experienced California Estate Planning Attorneys
Central Coast Law is a top estate planning law firm in Carpinteria, California. Our attorneys help families set up living trusts, wills, powers of attorney, healthcare directives in Santa Barbara, Ventura and Montecito. We also serve clients in probate, elder law, retirement planning, asset protection and Veterans Affairs (VA) aid and attendance planning. Schedule a consultation with our experienced attorneys today by calling 805-881-3281.