When you begin the estate planning process, you have a mind-numbing number of options to maximize your estate and effectuate your wishes.
One estate planning vehicle is a trusts, but even within that vehicle, there are many, many options. One such type of trust is an irrevocable trust.
Irrevocable trusts move your assets into the name of the trust for the benefit of your beneficiary or beneficiaries.
This, in turn, reduces your estate for tax purposes, in addition to protecting those assets from creditors and lawsuit.
However, these trusts gain these abilities because they cannot be unilaterally terminated, modified or amended by you.
Anything that is in your estate can be moved into the trust. This includes life insurance and annuity proceeds, investment assets, cash, real estate and even businesses. This can be especially valuable for those in a business or profession prone to lawsuits.
Irrevocable trusts are state-law dependent and have specific legal requirements. However, this means that to ensure they are legal, a Maryland lawyer is usually required for any Maryland trust.
Legal ownership of the transferred assets is held by the trust under the direction of the trustee, not you. Once you have created an irrevocable trust, you no longer have any control over its assets.