What is an irrevocable trust?
An irrevocable trust is a legal arrangement in which a person, known as the trustor, transfers ownership of their property or assets to another person, known as the trustee, to be held and managed for the benefit of one or more beneficiaries. Once the trust is created, the trustor cannot change the terms of the trust or revoke it without the consent of the beneficiaries.
There are several types of irrevocable trusts, including charitable trusts, credit shelter trusts, and special needs trusts. The specific purpose of a Maryland irrevocable trust will depend on the type of trust and the terms of the trust agreement.
Some common purposes of irrevocable trusts in Maryland include:
Asset protection: An irrevocable trust can be used to protect the trustor's assets from creditors, taxes, and the probate process.
Estate planning: An irrevocable trust can be used to minimize estate taxes and to ensure that a person's property and assets are distributed according to their wishes after their death.
Special needs planning: A special needs trust can be used to provide financial support for a disabled individual without affecting their eligibility for government benefits.
Charitable giving: A charitable trust can be used to make charitable donations and receive tax benefits.
It is important to carefully consider the purpose and terms of an irrevocable trust before creating one, as it cannot be changed or revoked once it is established. It is advisable to seek the assistance of a Maryland estate planning attorney when creating an irrevocable trust to ensure that it is properly established and meets all legal requirements.