Irrevocable trusts allow you to plan for how certain assets are held or distributed. Unlike revocable living trusts, which can be changed, amended, or revoked, irrevocable trusts cannot be changed, amended, or revoked easily. A living trust is simply one that is made while the person establishing the trust is still alive. Living trusts can be irrevocable, too. Because you cannot revoke these trusts, they lack flexibility and are typically used in complex and unique situations, and they are often more expensive than wills or revocable living trusts.
The Difference Between a Will and a Trust
The words will and trust are familiar to most people. But exactly what they are or do may not be as well-known. They are different, but one thing they do have in common is that they can work together for a comprehensive estate plan.
The main difference between a will and a trust is that a will has no effect until the person who makes it dies. The will then designates to whom property is distributed. By contrast, a trust allows for property to be distributed before death, at death, or after.
Why Create a Trust You Cannot Revoke?
Some trusts that cannot be revoked are created for a specific purpose. Irrevocable life insurance trusts are used to reduce estate taxes by getting life insurance proceeds out of an estate. Others are used to protect important assets or preserve assets for those receiving government benefits. A trust that cannot be revoked is often created to reduce estate or income taxes.
Other examples include:
A trust that cannot be revoked also cannot be amended, modified, changed, or terminated except by a probate court as provided for by law.
The use of irrevocable trusts can be incredibly complicated. It is a good idea to have a knowledgeable and skilled attorney help you evaluate your specific needs based on your total estate planning goals and desires. Please contact the estate planning and elder law attorneys of Bolt Hoffer Boyd Law Firm at (763) 406-7000 for a free initial consultation to discuss the opportunities for irrevocable trusts as part of your estate plan.