Irrevocable trusts are a powerful asset protection tool. This type of trust is just one of several that you can create under NY laws, but it works very differently from revocable trusts. If you wish to keep assets safe from a variety of different risks, you may wish to consider whether an irrevocable trust is the right solution.
Eghrari Wealth Training Law Firm provides assistance with the trust creation process. We can advise you on whether a trust is right for you and on whether irrevocable trusts or revocable trusts are a better option. We also help you follow formalities under NY law for trust creation and we provide assistance funding your trust so you get the benefits and protections expected. Give us a call today to find out more.
Asset Protection Benefits When Creating Irrevocable Trusts
The New York Estates Powers and Trusts law sets forth rules for trust creation and rules for how trusts work. Irrevocable trusts are trusts that you make which cannot be changed after their creation. Unlike revocable trusts, which provide you with flexibility and allow you substantial continued control over assets, irrevocable trusts require you to give up a substantial amount of control. You name a trustee and beneficiaries and you cede control over the assets held within the trust for the trustee to manage.
Because you no longer have control over the assets in the trust, and because you no longer own the assets (the trust does), the assets which are held within the trust can be protected. Depending upon where the trust is created, the type of trust you create, and the specifics of the trust document that you produce, there are lots of different kinds of asset protection benefits that can result from creating irrevocable trusts. For example, some possible benefits could include:
- Trust assets no longer counting as resources for Medicaid. If you ever need to go into a nursing home, your only two choices will likely be paying personally or getting Medicaid coverage (Medicare and private insurers only pay for short periods of skilled care). You can’t qualify for Medicaid until you’ve spent down assets, because Medicaid has resource limits. However, if you transfer assets to an irrevocable trust, they may not count for Medicaid coverage.
- Reducing or avoiding estate taxes: Assets which transfer upon your death could trigger estate taxes. Irrevocable trusts can be part of your tax avoidance strategy. There are estate taxes in both NY and under federal law that you could be required to pay.
- Preventing lawsuits and creditor claims. When assets are held in irrevocable trusts, the assets can be beyond the reach of creditors and beyond the reach of those who wish to file a lawsuit against you.
It is important to realize that not every trust provides these benefits. In fact, revocable trusts will not provide these protections at all, and irrevocable trusts may not provide these benefits and protections if you are a trust beneficiary. If you have access to the trust assets, the part of the trust that is available to you could still be considered to belong to you, and thus could be a Medicaid resource, could be subject to estate taxes, and could be accessible to creditors.
Are Irrevocable Trusts Right for You?
Laws on trusts are complicated, and they also vary from state to state. For example, some states recognize domestic asset protection trusts and others don’t. You need to speak with an experienced trusts lawyer to find out if an irrevocable trust should be a part of your estate plan and if the trust can provide the desired protections you are seeking.
Getting Help from a Suffolk County Trusts Lawyer
You need to understand what all of the different types of trusts can do to help you protect assets, as well as what the restrictions and limitations are for revocable and irrevocable trusts. Eghrari Wealth Training Law Firm can help. We know NY rules for trust creation and assist you in incorporating the right types of trusts in your plans for financial security for yourself and your loved ones.
To learn more about what irrevocable trusts are and how they can fit into your planning process, join us for a free seminar. You can also give us a call at (631) 265-0599 or contact us online to speak with a member of our legal team and get personalized one-on-one advice about trust benefits and trust creation. Call now to get started on taking control of asset protection.