People in Texas who are planning for the future may be looking for ways to best pass on their wealth to future generations while simultaneously shielding themselves from taxes over the years. Irrevocable trusts can be an important tool that help people to achieve their goals for their assets. When people transfer property to this kind of trust, it is removed from the estate of the trust creator. It also means that the creator has to relinquish control over the assets, an option that could help to protect beneficiaries from creditors or other parties.
Once an irrevocable trust is created, it is permanent; the trust itself becomes the owner of the assets after it is funded. The trustee then has the responsibility of managing the trust for the benefit of its beneficiaries. While creating an irrevocable trust may protect funds from being accessed during the grantor's divorce or by his or her creditors, some may wonder if it could be vulnerable to those seeking assets from the beneficiary.
People can take action when creating a trust in order to provide a greater amount of protection for the assets and protection from unwanted parties. The greater the powers of the beneficiary over the trust, the more vulnerable it may be to creditors or others. If the beneficiaries are themselves trustees, it may be possible to argue that this is essentially outright ownership of the property. When a non-beneficiary trustee has discretionary power over income distributions, the trust could be considered outside the beneficiary's control.
Of course, vulnerability to other parties and asset protection are only some of the many factors for people to consider when creating a trust. An estate planning attorney might provide detailed information about the options available and work with people to create the documents to enable them to leave behind their legacy.