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Is an irrevocable trust the right document for your estate?

You begin to reach retirement age, and you start thinking about the future of your assets after you pass away. You know which assets will fall into the hands of which beneficiaries, and you want to secure your decision in a legal document.

Irrevocable trusts allow you to permanently allocate specific assets to your beneficiaries while you remain alive. Irrevocable trusts, compared to revocable trusts, allow security as they cannot face modification or the probate process in Arkansas. Because the probate process may take months to distribute assets to your loved ones, many individuals choose to establish irrevocable trusts, so that their beneficiaries can receive their generous gifts quickly when they pass away.

It is important that, when allocating your well-earned property to your beneficiaries through an irrevocable trust, you utilize the expertise of an estate planning attorney. These attorneys help you determine which trust documents will best suit your unique situation and fulfill your wishes. If you feel that an irrevocable trust will benefit your loved one’s after you pass away, you want to ensure that the document will be legally upheld in Arkansas court.

The makings of an irrevocable trust

When you establish an irrevocable trust, you place specific assets in a secure fund. You can decide which assets, how much property or when a beneficiary can access the assets. When you place assets into the fund, you no longer have control over the property, as you now claim that your beneficiaries own the property, although they will not have specific access until you pass away.

Three basic benefits exist when you place assets in an irrevocable trust.

  1. Avoiding estate tax. Many individuals place assets in an irrevocable trust to avoid paying estate tax on the assets. Normally, when your estate goes through the probate process and is distributed among your beneficiaries, your assets will face taxation in Arkansas.
  2. Stopping creditors from retrieving assets. In addition, some individuals place assets in an irrevocable trust to block creditors from obtaining the assets for owed payments. Since the beneficiaries now technically own these assets, creditors cannot retrieve your property in the irrevocable trust.
  3. Restricting your beneficiaries. Lastly, you may wish to establish an irrevocable trust if you feel the need to restrict some of your beneficiaries in when they will access the trust or how they will use the assets. Most commonly, grandparents will use this trust to restrict young grandchildren on when and how they will receive property or collectible items.

Irrevocable trusts may not prove right for your situation. Perhaps you do not know which beneficiaries you will want to receive your prized possessions. Because irrevocable trusts cannot be modified, you worry that you will want to change your mind on some of your beneficiary decisions. Speaking to an attorney regarding your concerns about revocable and irrevocable trusts ensures that you draft the correct legal document for your assets.

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