If you want to pass on your belongings, big or small, to your next of kin, a trust is a great idea. There are many types of trusts depending on their specific structures and conditions. And you need to do some thorough research to decide which one is best for you based on your personal goals.
An irrevocable trust can look like a great option to you if you need to qualify for Medicaid or other government subsidies. There are some things you should be mindful of when setting up an irrevocable trust in NYC. This kind of trust is not for everyone since it is a direct signing off of your assets with no power left to you. However, if you are in one of the following situations, an irrevocable trust can be a good idea—with an attorney’s go-ahead.
When You Are a Married Couple
If you are married and want to qualify for Medicaid for one or both of you, an irrevocable trust can come in handy. Most people decide to go for irrevocable trusts when it looks like they wouldn’t qualify for Medicaid or other government subsidies based on the assets they possess. By writing them off permanently and unconditionally to your next of kin, you are essentially transferring ownership of those assets. With a sufficiently stocked irrevocable trust, you can easily reach the threshold for medical benefits. Contact your lawyer to ask for more details regarding the set-up and funding of an irrevocable trust.
When planning your estate as a married person, your ultimate goal should be ensuring current and future care for yourself and your spouse. If you choose to set up an irrevocable trust, there will be better chances of Medicaid benefits for whichever one of you needs them.
If the Beneficiary is Old Enough
When transferring funds to a minor; whether it is your own child, your grandchild, or your niece or nephew; it would make no sense to use an irrevocable trust. Since they are impressionable and subject to an adult’s decisions, you should always go for a living trust when you want to transfer property to them. However, if the beneficiary is above 18 and you want to create an irrevocable trust for whatever reason, your attorney might advise you to go for it!
If the Beneficiary Is Responsible
Some adults find it hard to keep their act together. It could be an addiction or an attitude problem, but whatever it is, it is not wise to name your estate after someone who could be so non-serious about it. In other cases, the beneficiary (whether your child or grandchild) is especially responsible and serious. If you feel like your property and estate will be managed well by the person of your choosing – there’s no reason not to go for an irrevocable trust. Remember; you cannot change your decision once it has been made, so you must consult with an estate planning attorney before heading signing off.
When You Have Financial Options for the Future
Another reason to go for an irrevocable trust could be certainty about the future. Suppose you had always decided that your beach house in Malibu will be your youngest daughter’s when you pass away. You have no personal ties to the place and you are not counting on it for future income. If such is the case, it makes sense to create an irrevocable trust in NYC with the help of your attorney and transfer beneficiary rights to the official recipient.
Of course, you will be able to set it up so that it is in the trustee’s care up until a certain point. Whatever your particular situation is, make sure to discuss with your estate planning attorney thoroughly before going ahead with it because there is no taking it back.
If the Assets Are Not Generating Income
Even though some trusts let you evade probate, pay lower taxes, and avoid heavy legal fees, there could be exceptions here. If you add an income-generating asset to an irrevocable trust in NYC, it will be treated as a separate legal entity and will be liable for income tax as such. However, if the assets you add are not generating income, you will not be taxed extra.Irrevocable trusts are a great way to transfer assets, but we advise you to be thorough with your homework before setting it up. Let us reiterate: once you have transferred your assets to an irrevocable trust, you cannot take them back. They come under the ownership of the trust, which means that only the trustee can make decisions regarding it. Before signing that document, get in touch with an estate planning attorney so they can advise you best according to their vast experience.