Irrevocable Trusts

Arizona Irrevocable Trusts Attorney

Advanced Asset Protection Through Irrevocable Trust Planning

Although many Arizona residents are familiar with the importance of having a will, others are unaware of the benefits of creating an irrevocable trust. If you are concerned about asset protection or helping your family members and other heirs avoid the probate process, an irrevocable trust can help you reach your goals. Having an irrevocable trust lawyer on your side is the most practical way to ensure that your interests are fully protected. 

Doug Newborn Law Firm, PLLC, is committed to helping clients protect their assets and prepare for the future. Contact our Tucson, Arizona, law office today to schedule a free consultation to learn more about our legal services and how we can assist you.

What are the Benefits of Creating an Irrevocable Trust?

Although they offer numerous advantages, irrevocable trusts are frequently overlooked in estate planning. The grantor, the individual who establishes the trust, is offered significant benefits, and beneficiaries may also receive considerable protections and financial advantages.

Assets held in an irrevocable trust are generally shielded from creditors and lawsuits and can also assist with Medicaid eligibility. Irrevocable trusts also provide essential tax benefits, especially if you are concerned about minimizing your taxable estate for beneficiaries. In both instances, assets are protected from creditors or not counted toward your estate tax liability, as they are no longer considered to belong to you but are property of the trust.

Assets held in an irrevocable trust are also exempt from the costly and time-consuming probate process, which allows your beneficiaries to receive critical financial resources more quickly. Additionally, unlike a will, which becomes public, the terms of a trust remain confidential, adding an extra layer of privacy.

What is the Difference Between a Revocable Living Trust and an Irrevocable Trust?

One of the most common questions clients ask concerns the difference between a revocable and an irrevocable trust. Although both types of trusts can help your beneficiaries avoid probate, they differ in key ways.

For example, assets placed in a revocable trust can avoid probate and assist with incapacity planning. Nevertheless, a revocable trust does not offer the same legal protections as an irrevocable trust. Because assets held in a revocable trust are still considered under your control, they are not shielded from creditors or lawsuits. Even more importantly, any assets placed in a revocable trust are considered countable assets if you are concerned about Medicaid planning.

An irrevocable trust is the most effective way to safeguard your assets for yourself, your beneficiaries, and Medicaid eligibility.

What are some of the types of Trusts That Assist With Asset Protection?

There is a wide range of irrevocable trusts that you can choose from depending on your needs and financial goals. Some of the most common types include:

  • Irrevocable Life Insurance Trust (ILIT): A type of trust designed to hold a life insurance policy to remove its proceeds from your taxable estate. Its purpose is to help your beneficiaries avoid the proceeds from having to go through probate while also keeping it safe from creditors.
  • Intentionally Defective Grantor Trust (IDGT): An estate planning tool that essentially freezes the value of the assets held in the trust for your beneficiaries, while you can maintain the tax responsibility with the intention of reducing your taxable estate.
  • Medicaid Asset Protection Trust (MAPT): A trust tailored to individuals who wish to meet ALTCS (Medicaid) eligibility requirements while protecting their assets.
  • Charitable Trust: Charitable trusts are irrevocable trusts that hold and manage assets to fund charities. Charitable trusts are utilized for philanthropy and tax-planning purposes.

Before you make any decision as to the type of trust that you want to create, it is in your best interests to consult with an attorney who can help identify which option would work best for your needs.

What Assets Should Be Placed in an Irrevocable Trust?

Irrevocable trusts can provide you and your beneficiaries with significant asset protection and privacy. An irrevocable trust can safeguard financial resources such as life insurance policies and appreciated assets, including stocks, bonds, and mutual funds. Other assets that should be placed in an irrevocable trust include:

  • Cash or liquid assets
  • Business interests, including partnerships or interests in LLCs
  • Real estate interests, such as vacation homes or investment properties

Assets that should not be placed in an irrevocable trust include

Even though irrevocable trusts offer a great deal of asset protection, several financial resources should not be placed in a trust, including:

  • Vehicles should not be placed in trust, as this can complicate insurance matters and leave the trust open to potential lawsuits.
  • Retirement accounts, including IRAs, 401(k)s, and 403(b)s, as this could trigger a heavy tax burden.
  • Health savings accounts could lose their tax-exempt status once they are transferred to a trust.
  • Assets under the threat of an impending lawsuit should not be placed in a trust, as the court could see this as a way to avoid losing financial resources.

Contact Doug Newborn Law Firm, PLLC, today to Get Started on Your Estate Planning Needs

Doug Newborn Law Firm, PLLC, is committed to helping Arizona residents protect their assets and ease the burden of estate taxes for their loved ones. Many individuals mistakenly believe they need substantial resources or be an older adult to create an irrevocable trust. The truth is, most individuals who have a home, stocks, or other financial resources should consider the benefits of creating a trust.

Our estate planning lawyer has extensive experience creating personalized irrevocable trusts that help them achieve their goals and face the future confidently.

When you come to us for assistance, we listen carefully to your concerns so we can help you make informed decisions. Contact our law office today at 520-355-1161 to schedule a free consultation and get started on your case.