Understanding irrevocable trusts

On Behalf of | Jan 10, 2022 | Trusts

Trusts in Oregon are a safe way of hedging your assets until they’re transferred to your heirs. For as long as you’re living, there are financial benefits in storing your wealth in a trust. Every estate is exposed to taxes, fraud and creditors, but these financial risks are often reduced or avoided by filing your assets into a trust. Two main types are revocable and irrevocable trusts. A revocable trust is flexible and can be withdrawn from. An irrevocable trust, however, isn’t as flexible.

Not easily changed

For an irrevocable trust, its written directives are strictly upheld. Irrevocable trusts are either not easily changed or can’t be changed at all. The trustee and beneficiary you set, for example, can’t be changed on a whim. Some estate owners need this imperative to bind their estates. Other estate owners need the flexibility of assigning themselves as a trust’s beneficiary.

Assets out of your control

Consider the state of your wealth if some of your assets were legally placed out of your control. An irrevocable trust is a legal entity with the right to possess property. This includes your property when you place it under the contract of the trust. Though you are no longer the person legally entitled to the assets of an irrevocable trust, the advantages allow you to:

  • Reduce taxes: Since a trust’s assets are no longer technically yours, they avoid taxation.
  • Protect public eligibility: Some trusts ensure that your wealth won’t eliminate your eligibility for public assistance.
  • Avoid debt collectors: Some business trusts ensure that any debts you owe are restricted to a business you own instead of you personally.

Your trust and the purpose it serves

A trust, being a fiduciary instrument, is an agreement to arrange your assets under the care of a trustee. This relationship lets assets fall under the ownership of the trust they’re placed in. Consider a trustee who will work for the benefit of your beneficiaries and adhere to the document so that your wishes are fulfilled.