When you begin estate planning, you may feel overwhelmed by the sheer amount of documents available to establish. However, not all will apply to your circumstances. As such, it’s essential to consider whether or not you must protect your assets from creditors, which generally occurs if you are part of a lawsuit or court judgment. If this reflects your circumstances, you’ll want to keep reading. The following blog explores how an irrevocable trust can help shield your assets with the assistance of PA trust attorneys.
What is an irrevocable trust?
When creating a trust fund, generally you must decide whether it will be revocable or irrevocable. This essentially means you must determine whether or not you want the ability to change the terms and conditions of the trust later down the line.
If you create an irrevocable trust, you give up the rights to your assets. This means you are not the trustee or beneficiary of the fund, but you are removing them from your ownership entirely. While this can help shield your assets from creditors, it also means you can never change the terms and conditions of the trust or remove assets from the fund. In certain circumstances, the court may allow you to modify the trust, but this is rare. As such, you must understand that you are creating a permanent document before deciding if this option is right for you.
How do they shield my assets?
Because you are removing the assets from your ownership, creditors can no longer legally pursue these assets if you owe money for a settlement or court order. This is because they cannot seize assets that do not belong to you, even if they are in a trust you are funding.
Even if you don’t plan on being the defendant in a lawsuit, placing assets in a trust can help provide peace of mind that your assets are protected and will be distributed to your beneficiaries according to the terms you’ve enacted.
How can I set one up?
If you’re interested in creating an irrevocable trust, the most important thing you must do is consult an experienced attorney. While these can certainly help shield your assets, you must also understand that you cannot modify or remove assets from the trust. As such, an experienced attorney can help you determine whether or not this is the best option for your needs.
To set up this kind of trust, you and your attorney will create the terms and conditions of the fund. Next, you will name a trustee, who is responsible for managing and distributing the assets held in the trust according to your wishes. Finally, you’ll transfer the assets, relinquishing your ownership.
When you need assistance setting up an irrevocable trust, the dedicated team at Friedman Schuman is ready to help. We understand how complex this process can be, and as such, we will do everything possible to guide you through this process. Contact us today to connect with a member of our firm to learn more.
