Many Washington residents include irrevocable trusts in their estate plans, and the beneficiaries of these trusts are usually their children or grandchildren. When assets are placed into irrevocable trusts, they are no longer owned by the grantor. This means they are protected even if the grantor files for bankruptcy or is sued in civil court. Setting up trust funds for children provides peace of mind because it ensures funds will be available to provide for their needs and cover the costs of higher education.
Avoiding probate
Trusts are also popular estate planning tools because they allow assets to be distributed discretely. When money is left to children in wills, the probate documents become part of the public record. Wills can also be challenged by disgruntled heirs, and these disputes are often bitter and contentious. The assets held in trust are no longer owned by the grantor’s estate, so they are not subject to probate.
Greater control
Some people choose to set up trust funds for their children because they want to have more control over when and how assets are distributed. Trust funds can be structured to disperse assets when children reach a certain age, or they can provide regular support payments. Trusts can also be set up to provide funds when children graduate from high school or college. Parents or grandparents can use trusts to help their children or grandchildren buy homes or start businesses, and trusts can also provide sobriety rewards to children struggling with drug or alcohol problems.
Irrevocable means irrevocable
Irrevocable trusts offer many benefits, but flexibility is not one of them. Once an irrevocable trust has been set up, the terms cannot be changed. This is why it is important to think carefully before drafting one of these documents. When used correctly, trust funds are versatile and useful estate planning tools. They make sure that crucial funds will always be available, and they encourage children to live responsibly and pursue their dreams.
