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The versatility of irrevocable trusts

Some may assume that, because an irrevocable life trust generally can't be changed once it has been set up, such trusts are fairly limited in their uses. However, irrevocable trusts are actually a fairly versatile estate planning device.

One reason for this is that, while the terms of an irrevocable trust generally become fixed once the trust is established, there is a great deal of flexibility in the types of terms a person can select to have for the trust when setting it up. Thus, there are many different types of irrevocable trust set-ups for individuals to choose from. A list of some of the different kinds of irrevocable trusts can be seen on our irrevocable trusts page.

Another contributor to the versatility of irrevocable trusts is the effect such trusts generally have on the assets that are put in them. When a person puts assets into an irrevocable trust, the assets generally are no longer considered part of the person's estate. There are a variety of different reasons a person may find this useful. For example, it can take these assets out of the estate tax calculation and protect the assets from certain types of depletions, such as depletions by creditors.

This unique characteristic of irrevocable trusts makes it so such trusts can be used in relation to the pursuit of a variety of different estate planning goals.

When it comes to an estate planning goal a person has, there may be multiple ways to try to achieve that goal. Thus, when a person has an estate planning goal an irrevocable trust could be used for, an important question for to ask is: would an irrevocable trust be the best way to try to achieve this goal, given that person's circumstances? A variety of different circumstances could impact how useful an irrevocable trust would be for a given person's estate plan. Thus, when considering setting up an irrevocable trust, a person may want to have an estate planning attorney review their circumstances and advise them on how well-suited such a trust would be for them.

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