Utilizing Irrevocable Trusts For Estate Planning In Arlington, Virginia

There are many ways to set up trusts as part of your estate plan in Arlington, Virginia. An irrevocable trust is one that cannot be changed after it has been created, which can give it some specific benefits, such as reducing the overall value of your estate. A revocable trust, on the other hand, can be altered after it has been initially set up and funded.

While working on your estate plan, it can be helpful to have an experienced estate planning lawyer on your side, so contact NOVA Estate Planning, PLLC, for a consultation. Founding attorney Jonathan D. Cox has drafted hundreds of estate plans, both while running his own firm and when he previously worked at a small boutique firm. He’s known for knowledgeable legal guidance, attention to detail, and helping individuals find unique solutions based on their specific needs and family dynamics.

Key Benefits Of Irrevocable Trusts

Because irrevocable trusts remove the assets from your estate, they can help with asset protection, such as in the case of lawsuits or divorce cases. They also protect those assets from creditors. A creditor may seek payment from an individual directly, but typically cannot take funds from a trust.

Additionally, there can be some tax advantages, as lowering the value of the estate can reduce estate taxes. Irrevocable trusts are sometimes used for Medicaid planning, as they may be able to help preserve access to benefits when there is a means test and set money aside for future expenses.

Types Of Irrevocable Trusts

Some potential types of irrevocable trusts to consider include:

• Life insurance trust: You can choose the trust as the beneficiary on a life insurance policy, and it then receives the payout when you pass away. Money can then be distributed to the beneficiaries in accordance with the trust.
• Special needs trusts: If a beneficiary has special needs, directly giving them a large inheritance could cause them to fail the means test and require them to spend the inheritance down. Putting it into a trust, however, maintains their eligibility for benefits and the trust can then help with expenses not covered by those benefits.
• Charitable trust: Trusts can often be used to pass money to charity, such as a charitable remainder trust, which passes money to specific beneficiaries and then sends the remainder to the charity.
• Asset protection trusts: As noted, assets sometimes need to be protected from creditors and lawsuits, so this can be a way to protect an inheritance from simply being absorbed by third-party institutions.
• Medicaid qualifying trusts: When making an estate plan, considering the need for long-term medical care and Medicaid benefits is important, and putting assets in a trust can help to ensure that you still qualify for the benefits you need.

Our team can help you determine exactly which type of trust is right for your estate planning goals.

When To Consider An Irrevocable Trust

Irrevocable trusts are often used with high-value estates, where they can help to reduce that value for tax purposes. They’re also useful for families with special needs family members, who want to be able to pass an inheritance on without having an unintended negative impact. They can be used for specific legacy goals, like supporting a charity, and they can also be used for long-term care planning and Medicaid eligibility. If there are any future concerns, such as potential creditor claims, an irrevocable trust can help to protect assets so that they aren’t lost.

The Process Of Creating An Irrevocable Trust

The first step in creating an irrevocable trust is to start with an initial consultation. When you choose NOVA Estate Planning, PLLC, the initial consultation is free.

Next, the documents will need to be prepared. This is when you determine what focus you want the trust to have, such as differentiating between a charitable trust and a special needs trust.

The trust does need to be funded after it is created, so assets will be transferred out of your estate and then held by the trust. Notably, with an irrevocable trust, this typically cannot be undone or changed once it has been accomplished.

Finally, the trust will need ongoing administration. It may provide assets to beneficiaries or organizations long after your own passing. It’s important to choose the proper trustee to administer the trust and utilize the funds.

Call Now For A Free Consultation

If you have questions about using an irrevocable trust or you want to know what paperwork is required to get the process underway, call 703-794-5630 or use the online contact form to set up your free initial consultation in Virginia today. Our experienced team is here to help you explore all of your options and settle on an estate plan that is best for your family.