No matter what you may have thought before, trusts aren’t only useful for people like Jeff Bezos or Bill Gates. In fact, their terms can also be beneficial to those with a reasonably valued estate. Your spouse, children, and other loved ones are close to your heart.
You trust them blindly and would love to name them beneficiaries of all your assets. However, the legal terminology can make it difficult for you to understand what it all means and what kind of trust structure to go for.
In many ways, an irrevocable trust in Brooklyn is a good choice if you are looking to leave your entire estate to someone able and responsible. It is a great way to get tax exemptions while saving your family from tedious and lengthy probate. It could also prevent the beneficiaries from spending the money all at once since there is an added ‘trustee’ who will manage the trust. Plus, it can help you qualify for Medicaid or other government subsidies by hiding a bunch of your assets in a box exempted from taxation.
Before you call your estate planning attorney and demand to set up a trust, here are some facts to convince you of its value. Plus, there are some implications you should be warned about. Here goes!
The Final, Irreversible Gift
A trust is an agreement between three people: the grantor (the person who owns the estate in the first place), the eventual beneficiary (the person who will receive the assets), and the trustee (the one in charge of managing the trust on behalf of the beneficiary). With the help of this contract, you transfer the ownership of your estate to the trustee completely.
If you choose an irrevocable trust, the name is self-explanatory: the assets will no longer be in your control. In effect, the trustee is completely responsible for all decisions regarding the contents of a trust. This is a huge decision because once taken, you give up all your possession rights—and it cannot be undone. This is why an irrevocable trust is dubbed ‘the last and final gift.
Protected from Creditors and Lawsuits
The reason many people agree to the binding conditions of an irrevocable trust in Brooklyn is that the benefits outweigh the danger for their particular situation. For one, once put in an irrevocable trust, your assets are protected from creditors and lawsuits.
This is especially beneficial for those who have their own business or are liable for lawsuits due to their professions (doctor and lawyers, for instance). For them, an irrevocable trust can serve as a safety box that is inaccessible to court orders and loan repayments. The assets you have placed in the trust are not yours, and so they cannot be taken away; it’s as straightforward as that!
Lower Estate Tax
It is true that if your assets are substantial, an irrevocable trust is more likely to be useful to you. Without an irrevocable trust, you can gift up to (approx.) 11 million dollars to your heirs without getting taxed. For married couples, this amount can go up to 22.5 million! This is called the tax-free gift limit. However, if your estate is larger than that, you will be charged a 40% federal estate tax.With an irrevocable trust in Brooklyn, taxpayers can save this heavy levy on valuable assets. Simply put, you can get around the IRS lifetime tax-free gift limit and your beneficiaries can be exempted from the federal tax! For those with millions worth of assets, this is great news.Medicaid and Government Subsidies
We’re not getting into technical details just now, but an irrevocable trust can be employed to qualify for Medicaid and other government subsidies. If you fund a trust with your most valuable asset, your ownership will be officially transferred to the beneficiary (controlled by the trustee) and it won’t show up on your records. By doing this, you could succeed in meeting the criteria if you were not before setting up the trust.Disadvantages to Consider
The benefits of an irrevocable trust are manifold, but there are some warnings you should heed. For instance, hardwire it into your mind that by funding this kind of trust, you are forfeiting all rights to the assets you transfer. They will not be yours to control. If you do want to change the terms of the agreement, it can only be done so with consent from the other two parties, depending on the structure of your particular trust.Before making this life-changing decision, please consider getting in touch with an estate planning attorney to make sure it’s the right choice for you. Remember, you will not get a chance to reevaluate this decision!
