Legal Counsel For Your Estate Planning Needs

What Is a Will?

Wills are legal declarations detailing what to do with your assets and property when you die. They include instructions for transferring assets and property after you pass away. A will typically cover all your properties, assets, and personal items. Because a will is a legal document signed in front of witnesses and accepted by the court, it becomes an official record.

The purpose of a will is to ensure that the person making the will (the testator) instructions are carried out. An executor is appointed in the will to follow those instructions and can distribute funds to beneficiaries per those instructions.

Wills and trusts are two separate legal documents that can be used together to help ensure the smooth transition of your estate to your heirs.

What Is a Trust?

A trust is a legal relationship whereby a rights holder grants the rights to another person or party who keeps them and uses them for the other person's benefit. It can either be revocable or irrevocable.

Irrevocable Trust and Non-Irrevocable

Irrevocable trusts cannot be modified, changed, or terminated without the permission of the grantor’s named beneficiary or beneficiaries. They can protect assets by removing them entirely from the trust creator's ownership. Non-irrevocable trusts are the opposite — they can be modified at any time, and they can also help protect assets but are not as effective as an irrevocable trust.

As I understand it, irrevocable trusts aren’t easy to tap. This differs from non-irrevocable trusts because, with irrevocable ones, you can’t change your mind. If you want to know more about this, please consult a qualified attorney.

Life insurance can help provide financial assistance for your loved ones in the event of your untimely passing. Life insurance helps maintain your family's standard of living, pay off debts, and support their education. When you die, the money goes directly to the beneficiary you name when setting up the policy. This can include a spouse, child, or another person you trust to carry out your wishes after your death.

What Is the Difference?

The main difference between a revocable and an irrevocable trust is:

An irrevocable trust cannot be changed, but a revocable trust can be altered.

The grantor can act as a trustee in a revocable trust but not in an irrevocable trust.

With a revocable trust, privacy is always protected when the grantor dies, and the information is kept within the family. But for an irrevocable trust, documentation when creating the trust will only be recorded if the estate passes through another legal proceeding. 

What Are the Main Parties Involved in an Irrevocable Trust?

Forming an irrevocable trust needs four parties involved, and we can help you come up with one. The team includes a trust protector to oversee the protectors, beneficiaries, the grantor, and the trustee’s trust. 

Should I Place My Home in an Irrevocable Trust?

Yes, who would not want to keep their home from creditors and estate taxes due to the legal setup of the trust. Some of the other reasons why you should get trusts include:

It minimizes estate taxes. If you are willing to gift money each year, we advise you use these funds to purchase an irrevocable trust since it helps you evade estate taxes when you die. You have also assured of grantor retained annuity, which allows you as a creator to get a set of income for several years, allowing some of the principal to go to family members’ estate tax-free. Your tax is also minimized after creating a charitable remainder to pay income to the family while leaving the rest of your trust funds to a charity at your death.

For eligibility for government programs. Irrevocable trusts shield your assets and incomes. The limitations tied to securing income and assets when you receive a lot of money do not deny governmental benefits. Like estate saving trusts, the beneficiaries are given total control over the trust hence continuous provision from the government since the trust funds are not included as the beneficiary’s assets and income.  Asset protection. When you want to protect your assets from your creditors, you will need an irrevocable trust. There is a need to use beneficiaries and trustees from unrelated parties. You can opt to use trustees from the same party who have limited power over trust your trust funds. However, when you opt for that, there is a need to look for what your state law has to offer if it is favorable, then the better.

Having an irrevocable trust does not necessarily mean you qualify for all the benefits associated with the irrevocable trust. It is different. If a trust protects you from estate taxes, it is most likely not set up with trustees who allow the creditor protection that the asset protection can afford. Before going for the trust, it is good to know if you need the irrevocable trust and what types of irrevocable trusts you should go for.

What Are the Main Disadvantages of Trusts?

Despite both trusts being something you would go for, revocable and irrevocable trusts can be expensive to draw up, complex to undo in the case of an irrevocable trust, and costly to rewrite in the case of a revocable trust. For an irrevocable trust, it would be challenging to dissolve if the need arises. For a revocable trust, you might encounter challenges such as securing your assets from creditors. 

Contact Us Today

At the Law Offices of Nomani and Nomani, we are just a call away. Book with us for a free consultation to learn more about wills and trust and what you need to go for, depending on your situation. We target to serve Houston, Missouri City, Stafford, Sugar Land, Bellaire, and the other surrounding Texas communities. Visit our website for more information, or call us at (713) 789-7500 to learn more about how we can help you.