If you want to take extra steps to ensure your family will receive their inheritance, you might consider creating an irrevocable trust. This is a trust that holds money or property for another person. Since the trust owns the assets, it can protect them against lawsuits and creditor claims.
The Motley Fool explains that once you create an irrevocable trust, you cannot alter its terms or abolish it. If keeping control over the trust concerns you, you may wonder when you should go through with forming the trust.
Making the trust during your lifetime
Creating an irrevocable trust involves a number of steps. You should prepare a trust document that describes how your trustee will manage the trust. You will also have to pick someone to serve as the trustee. Another priority is to transfer ownership of property to the trust. Signing your trust document will put the trust into effect.
Making a testamentary trust
Choosing a trustworthy trustee and giving instructions to run the trust provides you with a degree of control over the trust. However, if you worry that you will change your mind about how to manage the trust or what the trust should contain, you do not have to create the trust before your death. Instead, you can use your will to create your irrevocable trust.
While you are still alive, you can update your will to make changes in your trust. After you die, your estate executor will create a testamentary trust according to the terms left in your will. Your trustee will then take over the trust and begin administering it.
Consider your priorities
It may become necessary to make the trust as soon as possible so your children or other family members can start benefiting. The time you choose to create your irrevocable trust should depend on your priorities for your loved ones.