Brooklyn Irrevocable Trust Attorneys Help Your Safeguard Your Wealth
New York law firm drafts sound estate plans for effective asset protection
We’ve all heard the phrase, “Easy come, easy go.” But for many of us, the financial reality is “Hard to come by, easy to let slip away.” An irrevocable trust can provide an additional layer of protection for your hard-earned assets. A Brooklyn irrevocable trust attorney at Goldberg Sager & Associates can explore the advantages of using this tool to make your retirement more secure and to pass on more of your wealth to your family members and other estate beneficiaries.
What is an irrevocable trust?
An irrevocable trust is a legal entity that you create and fund with cash and/or other assets. An irrevocable trust differs from a revocable trust in that you lose all control of the property to the trustee that you appoint. However, it provides greater protection from creditors, liability claimants and taxation.
Advantages of setting up an irrevocable trust
Why create a trust that takes away your control of your own property? There are numerous benefits, which include:
- Asset protection ― Once you place an asset in the trust, you technically no longer own it. Therefore, a creditor or a plaintiff in a lawsuit cannot attach that property to satisfy a judgment. This is asset protection strategy can be valuable for an owner of a sole proprietorship, since that type of business entity does not create a wall of separation between business and personal assets.
- Medicaid eligibility ― Seniors who require long-term care can exhaust their retirement savings after using all their Medicare benefits. They must then “spend down” to qualify for Medicaid assistance. This can be financially ruinous, especially for a healthy spouse who needs to live off the couple’s life savings. By placing the family home and other assets in a trust, the couple can qualify for Medicaid benefits without falling into dire hardship.
- Avoid estate taxes ― New York State has one of the heaviest estate taxes in the country, reaching as high as 16 percent. Large estates could also be subject to federal estate taxes. An irrevocable trust can reduce the estate to below the taxation threshold, so you can pass more of your wealth on to your beneficiaries.
- Management in the event of incapacity ― The assets in your trust are managed by a trustee. Therefore, you need not worry about their protection if you become incapacitated.
- Avoid probate court ― The beneficiaries named in your trust receive benefits without having to go through the probate court. Thus, there are no delays in accessing property.
- Place conditions on bequests ― A trust allows you to set conditions that beneficiaries must meet before they can receive a disbursement of trust assets.
A downside to an irrevocable trust is that it is hard to amend. Once established, changes to the trust must get approval from the trustee and the beneficiaries.
What you should consider when naming a trustee
Trustees are fiduciaries charged with managing assets in the best interests of the beneficiaries and administering the trust according to the creator’s stated wishes. We recommend retaining a financial professional or an attorney to act as trustee. The trustee is entitled to reasonable fees for his or her services.
Types of irrevocable trusts
Common irrevocable trusts include:
- Life insurance
- Special needs
- Charitable
- Spendthrift
- Bypass
An estate planning lawyer at our firm can explain how each operates and help you determine the best option for your situation.
