Are There Different Kinds of Trusts in Tennessee?

Many people who are considering writing a will are familiar with the concept of trusts. Whether you have heard about them on television, discussed them with a friend or financial planner, or learned about them in some other way, trusts are a common part of American estate planning. Trusts are a simple and effective way to protect your assets while you’re alive and ensure your loved ones are cared for after you’re gone.

In their most simple form, trusts are arrangements that allow you to transfer ownership of assets into a legal entity called a trust. This entity is then managed by a trusted individual whom you appoint. This person is called a trustee. The trustee will manage the assets in the trust for you, according to specific instructions you have provided to them. The benefit of a trust is that, when you pass away, the assets in the trust are not your legal property—they belong to the trust. Because of this, the assets in the trust are not subject to being tied up in any legal red tape. The trustee can simply distribute the assets to their intended recipients according to your instructions.

Many people use trusts as a basic way to transfer assets to their loved ones. However, different types of trusts can serve additional benefits and purposes. One of the most valuable types of trust is an irrevocable trust. Although the name may sound intimidating to some people, irrevocable trusts are an effective strategy to protect your assets and ensure your family receives everything you want them to get.

What is an Irrevocable Trust?

An irrevocable trust is similar to other types of trusts except that it cannot be modified once it has gone into effect. In many instances, once you have established a trust, you can make changes to it as you see fit. This may include removing assets from the trust. In some instances, people may want to have ready access to the assets in their trusts. Many people find revocable trusts suit their purposes well. However, for individuals wanting an extra layer of security, irrevocable trusts may prove more effective.

Once someone has established an irrevocable trust, it lives up to its name: you cannot modify or revoke the trust without going through a complex legal process. This process can take a considerable amount of time, and in some instances may be more time-consuming than establishing the trust in the first place. While this may sound potentially intimidating, irrevocable trusts come with additional benefits and security measures that make them attractive alternatives to revocable trusts for many individuals.

What are the Benefits of an Irrevocable Trust?

Some people hear the difference between revocable and irrevocable trusts and immediately think revocable trusts are automatically the “best”. However, this is not the case. Many times, irrevocable trusts are the better option. Benefits of irrevocable trusts include, but are not necessarily limited to:

• Asset Protection
• Reducing Tax Burden
• Reducing Estate Value
• Medicaid Planning

Assets in an irrevocable trust are generally protected from creditors in Tennessee. Additionally, assets in an irrevocable trust can help reduce the value of your estate. This, in turn, can reduce the estate tax your loved ones may have to pay. Doing so not only relieves them of financial burden, but also increases the amount of your estate they’ll get to keep for themselves.

Having assets placed in an irrevocable trust from an early date can also help you when it comes time to plan for Medicaid. Applicants for Medicaid must meet very rigid, specific financial requirements. When considering applications, Medicaid will go back for a period of several years to assess your financial status. Placing assets into an irrevocable trust at an early date can ensure you still control what happens to these assets while not having them counted against you.

These are only a few of the potential benefits of irrevocable trusts in Tennessee. Due to recent changes to IRS rules regarding how irrevocable trusts are governed, it’s imperative that you consult an experienced estate attorney.

What Should I Do if I Need to Set Up an Irrevocable Trust in Tennessee?

Establishing an irrevocable trust can be an intimidating experience. It can also be a way to guarantee your family and loved ones’ financial stability for years to come, and help them secure their own futures. That’s why, if you or a loved one is considering an irrevocable trust, you must contact J. Anthony Bradley at Bradley Law Firm, PLLC.

Serving Germantown with compassion, diligence, and expertise, he knows how to establish irrevocable trusts that will most benefit his clients and those who matter to them. He’ll make the process easy to understand and simple to execute- and take care of the rest from there. That way, you can enjoy time with those you love, confident that their futures are secure. Don’t hesitate—if you or a loved one is considering establishing an irrevocable trust in Tennessee, call Bradley Law Firm, PLLC today at 901-441-8215