Why An Irrevocable Trust May Be The Best Gift

You may have many precious gift ideas for your loved ones. However, the gift of an irrevocable trust may be the best one yet. Instead of simply gifting your assets, setting up an irrevocable trust for them may be a better way to preserve assets for the future.

Setting up a trust is not a simple process, especially when compared to gifting assets outright. However, there are several benefits to it. A Boca Raton Estate Planning Attorney can help you set up a trust for your loved one.

What is an irrevocable trust?

A trust is a legal relationship between a trustee, who holds the legal title to a property, and the beneficiaries, who keep the property and use it for their own benefit. The person who funds the property is known as the trustor or grantor.

The trustee is responsible for managing the trust and ensuring that the beneficiaries get what they are entitled to. They are also responsible for making sure all the terms of the trust are being followed.

As the name suggests, an irrevocable trust cannot be revoked without the consent of the trustee or the beneficiary.

Why is an irrevocable trust a better gifting option?

There are various reasons for giving irrevocable trust to your loved one.

Income.

Creating a trust in Boca Raton will allow you to keep earning income from it and pay your living expenses. Depending on what the terms of the trust are, one can receive regular or one-time payments.

Control.

When you set up an irrevocable trust, you get to maintain some control over the assets. You can choose the trustees, beneficiaries, and how the assets are to be divided into each one of them. You can also choose when you want to change the beneficiaries and trustees and who will replace them.

Asset protection from creditors.

Assets put into an irrevocable trust cannot be accessed by the creditors. If you simply give away money or assets to your loved one, that gift could get lost because of their carelessness, creditors, or divorce. However, keeping funds in an irrevocable trust protects them from such issues.

Medicaid.

If you want to seek long-term medical care benefits in the future, it is important to start planning early. If you trust a fund or give away money five years before applying for Medicaid, you may be considered ineligible for Medicaid. However, the actual period of eligibility will depend on the amount you gave away. As stated before, putting assets in a trust allows you to retain control over them and collect the income.