Rathdrum & Post Falls Irrevocable Trusts
Trusts That Can't Be Changed or Revoked
An irrevocable trust is one that cannot be changed or revoked. It is set up in such a way that the trustee has complete control over the trust's assets and can do with them as they please, but the beneficiary cannot alter the terms of the trust or otherwise direct the trustee's actions.
The most common reason for setting up an irrevocable trust is to protect the beneficiary from their own financial mismanagement. For example, if a beneficiary has a history of substance abuse or gambling problems, an irrevocable trust allows them to continue to benefit from the trust's income without exposing the trust's assets to their vices. It also prevents the beneficiary from taking advantage of the trust's assets in order to avoid creditors or to meet their own personal needs.
To set up a trust for yourself or a loved one, contact the irrevocable trust lawyers at Rathdrum & Post Falls Estate Planning at (208) 486-0120.
Benefits of an Irrevocable Trust
The main benefit of an irrevocable trust is that it protects the trust's assets from the beneficiary's own poor judgment. This is especially important if the beneficiary is a minor, as it prevents them from wasting the trust's income on frivolous items, or from being taken advantage of by others. It also allows the trustee to invest the trust's money as they see fit, rather than as the beneficiary directs them to do, which can help the trust grow faster.
Trusts That Can Be Changed or Revoked
An irrevocable trust is a good option for many people, but there are some situations in which it is not appropriate. For example, if the beneficiary is the trustee's minor child, the trustee may not want to give up the ability to change the terms of the trust. In this case, the trustee can set up a revocable trust, which gives them the ability to modify the trust's terms at any time.
What Is a Grantor-Trustee?
The person who creates an irrevocable trust is called the grantor. However, they are not the trustee, because the trust cannot be revoked. Instead, they are called the grantor-trustee, because they are the one who created the trust, but they are not the one who controls it.
What Is a Trust Protector?
The trust protector is a third party who has the power to step in and take over control of the trust if the trustee is unable to fulfill their duties. They can take over as the trustee, or they can appoint a new trustee to take their place.
Trusts for Elderly Beneficiaries
An irrevocable trust is a good option for most beneficiaries, but it is not the best choice for elderly beneficiaries. The reason for this is that an elderly person may need to access the trust's funds in order to pay for their own healthcare costs. If the trust is irrevocable, they cannot do this without the trustee's permission. However, if they have a revocable trust, they can modify the terms of the trust in order to access the funds when they need them.
How to Set Up an Irrevocable Trust
Setting up an irrevocable trust is a fairly simple process. The grantor needs to draft a trust agreement which specifies the trustee and the beneficiary. The trustee then needs to file the trust agreement with the court, along with a document called a declaration of irrevocable trust. Once this has been done, the trust is considered irrevocable and the trustee can begin managing the trust's assets.
It is important to note that an irrevocable trust can be revoked if the grantor is still alive. However, once the grantor dies, the trust is no longer revocable, and the trustee is no longer able to change it. This is why it is so important for the grantor to make sure that they trust the trustee to manage the trust's assets properly, since they are no longer able to do so themselves. Our estate planning lawyers can help you protect your assets.
For more information about irrevocable trusts, or to set up a trust for yourself or a loved one, contact the trust attorneys at Rathdrum & Post Falls Estate Planning at (208) 486-0120.
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