You may use many different tools to compute your California estate planning and one that is available to you is a trust. You can choose to create a revocable or irrevocable trust. Irrevocable trusts cannot be changed or amended after they are created.
This is because they formally move the assets outside of your estate and then the trust is responsible for paying its own income tax and filing a separate return under the guidance of the trustee. One of the major reasons for selecting an irrevocable trust is because it gives you a higher level of protection from estate taxes and creditors. A revocable trust, on the other hand, has more flexibility because you can make changes to it during your life, but in doing so, you give up some of the protections offered by an irrevocable trust.Â
Since there’s a lot to think through, it’s helpful to find an attorney familiar with the estate planning process to help you discuss your options and find the right documents and tools for your needs.
You can set up your revocable trust or will to automatically create an irrevocable trust at the time that you pass away. When you use your will to create an irrevocable trust, this is known as a testamentary trust, but you’re also eligible to set up irrevocable trusts over the course of your life.
You’ll want to ask yourself several important questions before meeting an estate planning attorney to discuss the purposes of creating a trust. You may be curious about the best ways to use a trust to keep a family business in the family, transfer wealth to the next generation, protect your assets from creditors, minimize estate taxes, or leave a legacy with a charity that you support. There are a variety of different situations where you can use an irrevocable trust to accomplish these goals.
If you’re ready to schedule a consultation with our Pasadena estate planning office, contact us now.
