Pennsylvanians who want to create estates and pass their assets on may rely on various forms of trust funds. Like other trusts, the irrevocable variety is created on behalf of designated beneficiaries and overseen by an independent administrator. Unlike other options, however, they're permanent. Because irrevocable trusts can't be modified, it's important to have a firm plan in place before creating one.
Irrevocable trusts can protect assets from creditors, Medicare benefit garnishment and legally ordered court judgments against their original owner. They can also exclude certain properties from estate taxation and help prevent reckless spending by heirs.
The main reason to create an irrevocable trust should be to ensure that beneficiaries receive assets under specific conditions. Testamentary irrevocable trusts are created by terms in an individual's will after that person dies, giving them the sole power to make modifications to their function while they still live. A grantor retained annuity trust is a separate option that might let one pass on money to heirs without incurring estate tax. Qualified personal residence trusts instituted prior to a person's death often hold real estate like primary residences.
The efficacy of trusts as estate planning vehicles depends on the grantors' needs and desires. When combined with wills and other tools, they can be employed to create comprehensive estate plans that protect beneficiaries from a range of future events. Because some trusts can't be changed, however, their creators must carefully consider the types of terms they include and their potential ramifications. An attorney might be able to offer some insights into important concerns like tax burdens and administrative costs.