An irrevocable trust is an estate planning instrument that Georgia citizens may use when planning their estate to protect assets in the trust from creditors of their beneficiaries. It is important for those who choose this type of trust to understand how it works and factors that determine when a creditor can reach assets.
When property is placed in a trust, a beneficiary’s creditors and spouses who have filed for divorce may ask a court for a share of the property. The advantage of using an irrevocable trust compared to some other types of trusts is that it can sometimes shield assets from creditors.
Courts look at how much control a beneficiary has over property, including when they receive distributions to determine whether or a creditor or spouse should get a share.
A court may also look at the relationship between the trustee and the beneficiary as well as a beneficiary’s rights to appoint other beneficiaries. If a trustee and a beneficiary are close relatives, a court may determine that the trustee is not really an objective party.
An attorney with experience in estate planning may be able to help individuals who have questions about how to protect their property. It is important for clients to be completely honest with an attorney about their concerns so that the attorney can better advise them. For example, clients who are worried that their relatives will spend money quickly or that a beneficiary’s spouse will try to take their assets in a divorce should advise their lawyer of this information because these are important concerns for an attorney to know.
An irrevocable trust is just one of the many types of estate planning instruments that an attorney might use to help clients protect assets and inheritances. An attorney may also be able to advise clients about the tax benefits of different types of trusts.