Irrevocable Trusts: What You Need to Know
Many people want to provide for their loved ones but in a way that allows them to retain control over their assets. An irrevocable trust can be a great way to achieve these estate planning goals. Irrevocable trusts have advantages over alternatives like wills or revocable trusts, but they also require a different way of thinking about your assets. With the potential for substantial tax savings and other benefits, irrevocable trusts are worth considering in your personal estate planning.
An irrevocable trust is a trust that you create to hold property for the benefit of someone else. What makes the trust irrevocable is that once you create it, its terms are set, and you can't make future changes to the trust document. That's in contrast to revocable trusts, in which the person who created the trust can typically change its terms or terminate the trust at will.
You can set up irrevocable trusts in several different ways. The simplest is to make an irrevocable trust during your lifetime. This involves preparing the trust document, transferring property to the trust, and then signing the trust agreement to make the trust effective. From that point on, the trustee is required to follow the terms of the trust, which will govern things like how the assets will be invested and who is entitled to receive distributions from the trust either now or in the future.
Source: Fool.com
