As we and our loved ones grow older, new challenges and risks can arise—beyond just health concerns. Financial security can become vulnerable to mismanagement or even exploitation by unscrupulous individuals. Even if a solid estate plan, including a revocable trust is in place, there’s still a risk that an aging loved one could be influenced to alter these documents with the help of a different attorney.
One effective way to mitigate this risk is to plan proactively and consider establishing an irrevocable trust. This type of trust offers significant protection against unauthorized changes and undue influence. Here’s why it might be an essential step in your estate planning journey.
What Is an Irrevocable Trust?
As the name suggests, an irrevocable trust is not subject to changes or amendments once it is established. This unchangeable feature is a key aspect of its protective power, as it ensures that the terms of the trust remain intact, safeguarding the assets held within.
However, it is crucial to establish the trust under the right conditions. The individual creating the trust (the “Grantor”) must have the legal capacity to do so and must not be under any undue influence. In some cases, obtaining a Certificate of Independent Review from a secondary attorney can provide additional assurance that the trust was established properly.
Benefits of an Irrevocable Trust
- Protection Against Undue Influence
By locking in the trust’s terms, an irrevocable trust helps prevent any unauthorized changes, even if an aging loved one is later pressured or influenced. - Preservation of Assets
Assets such as real estate, bank accounts, and investments can be securely transferred into the trust, ensuring they remain protected from mismanagement or misuse. - Tax Benefits
With proper provisions, the trust can be structured so that income taxes generated by the assets are still taxed to the Grantor. Additionally, the trust assets may qualify for a step-up in basis upon the Grantor’s death, minimizing capital gains taxes for the beneficiaries.
Planning Ahead Is Key
The best time to establish an irrevocable trust is before capacity diminishes. Early action ensures that your loved ones’ wishes are honored and their assets are protected. Working with a qualified, experienced estate planning attorney is essential to navigate the complexities of creating a trust and tailoring it to meet your family’s unique needs.
If you or a loved one are exploring options for protecting your family’s future with an irrevocable trust, please reach out to our Intake Department at 760-448-2220 or at https://www.geigerlawoffice.com/contact.cfm. We have offices in San Diego County (Carlsbad) and Orange County (Laguna Niguel), but we assist can families throughout California as well.
