Many South Carolina residents are familiar with trusts, but not everyone understands irrevocable trusts. An irrevocable trust can only be altered or terminated if the beneficiaries consent to the change. The grantor no longer owns the assets in the trust.
That might sound unappealing if you’re looking to keep control of assets. For some people, irrevocable trusts are a bad idea. In certain cases, though, they’re ideal. Because you no longer own what you put in an irrevocable trust, it might help you preserve assets.
An irrevocable trust might ease the burden of estate taxes. Suppose you want beneficiaries to receive assets without worrying about an estate tax. In that case, this sort of trust might work better than leaving things to those beneficiaries in your will.
Both Supplemental Security Income and Medicaid impose upper limits on the assets of recipients. If you create an irrevocable trust to avoid those upper limits, the beneficiary cannot have control over the trust. Most importantly, you can’t be the beneficiary of this form of trust if you’re its creator.
If you want to avoid creditors taking portions of your assets, an irrevocable trust might be wise. Because the assets are no longer yours, creditors can’t necessarily make any claims against them. An irrevocable trust might also be helpful if someone sues you. In the same way that creditors can’t always collect from an irrevocable trust, such trusts might also be out of a lawsuit’s reach.
Each kind of irrevocable trust presents pitfalls, and no type will necessarily help you meet every single goal you’re hoping to achieve. If you’re unsure what sort of trust you’d like to create, contacting an attorney with experience in estate planning might be beneficial.