When you set up a trust, you expect the assets stored in the trust to be assigned or distributed to beneficiaries after your death. Many Americans use revocable living trusts for just this purpose; you and your beneficiaries can access or benefit from the trust assets while you are still alive, but the remaining assets are then distributed once you pass away.
What happens when you set up an irrevocable trust, however? As with a revocable trust, it all depends on how you set up the trust and what its terms stipulate.
What’s an Irrevocable Trust?
An irrevocable trust is simply a trust that you cannot modify or change after it’s set up. A revocable trust does allow modifications or changes to the trust’s terms and distribution rules after it’s set up – that’s why it’s such a popular estate planning tool for those who are still alive.
But with an irrevocable trust, those kinds of changes are simply impossible without petitioning a court for a change.
How Does an Irrevocable Trust Work?
An irrevocable trust works similarly to any other trust instrument:
- You, the grantor or settlor, decide to set up the trust and name the beneficiaries as well as the trustee
- The trustee is the third party that takes ownership of the assets within the irrevocable trust, then manages the trust and handles any distributions according to the trust’s documents
- The beneficiaries can include you, your kids or grandkids, or any other fisheries you want to receive distributions from the trust
The big difference between an irrevocable trust and a revocable trust is changeability. An irrevocable trust cannot be changed except in specific situations or through a court petition.
It’s sometimes possible for all the beneficiaries to band together and petition the court for a change to an irrevocable trust, for example, though the court has to allow the change to go through for it to count.
So, What Happens to the Trust Assets When You Die?
Say that you put a good deal of your estate and your wealth into an irrevocable trust. The purpose of the trust is to store your wealth, ensure that it grows over time, and keep it safe from lawyers, creditors, and other potential attackers until you pass away.
Then, you want the assets in the trust to be gradually distributed to the beneficiaries you name. Maybe you want the trust to stay functional and the assets to remain within long enough so they generate further income for future descendants.
Whatever the case may be, what happens to your irrevocable trust’s assets after you die only depends on whether or not you are the trustee.
If You Are the Trustee
Some irrevocable trusts allow you to be both the grantor and the trustee. If this is the case, and you pass away while acting as the trustee for your irrevocable trust, trustee duties simply pass on to the subordinate trustee you should have named in your trust documents.
When you set up an irrevocable trust for the first time, your lawyers will advise you to name one or more subsidiary or secondary trustees. These subordinate trustees will take over the trustee administration and management duties that you handled previously.
If you have more than one subordinate trustee named, all the trustees will work together to tackle these responsibilities. That’s it!
At that stage, whatever is outlined in your trust regarding its management, trustee duties, etc., should be handled by your subordinate trustee(s). If you tell the trustee to continue distributing (or not distributing) assets just like you have been, they have a fiduciary obligation to do just that.
If You Are Not the Trustee
If you aren’t the trustee, nothing happens at all unless you want it to. Again, if you set up your irrevocable trust so that it remains functioning just the same after you pass away, your trust won’t change one iota when you die.
The reverse is true if you do include provisions or rules stipulating changes to the trust and its distributions after you pass away. It all depends on what you write when you form the trust for the first time.
Does the Trust Remain Intact After Death?
It can! Some high-net-worth individuals are confused about this fact since they might be used to revocable estate planning trusts dissipating or dissolving once the grantor passes away.
This does not have to be the case with an irrevocable trust, especially an asset protection trust. With such a trust set up, it can continue in its current state for decades to come, especially if it is drafted with the right legal language.
Of course, you can also stipulate that your irrevocable trust does dissolve after your death. Work with knowledgeable trust setup specialists, like the experts we have at Dominion, to make sure your irrevocable trust is exactly what you want it to be both during your life and after.
There’s No Need to Worry About Irrevocable Trust Assets with the Right Setup
If you’re concerned about the effectiveness of your irrevocable trust and the protection of the assets within after you pass away, don’t be. So long as your irrevocable trust documents are drafted properly, your trust assets will still be protected long after your death.
Even better, you can set up your irrevocable trust such that the assets within continue to generate money for your beneficiaries for decades to come. Many high-quality irrevocable asset protection trusts are specifically designed in this way.
They store valuable assets within for the purpose of generating constant income for their beneficiaries after the original grantor dies.
Of course, you’ll only be able to see this outcome if you partner with the right trust setup specialists. At Dominion, we only work with high-net-worth individuals like business owners, medical professionals, and others who have $10 million or more in net worth.
Once you reach this market, we can set up a highly durable offshore asset protection trust for whatever goal you have in mind.
Want to protect your assets now and in the future against lawsuits, creditors, and other possible threat vectors? We can do that for you. Want to make sure that your assets continue generating income for not just your grandchildren but your great-grandchildren? We can do that as well.
With the way we set up trusts, you’ll be able to rest assured that they’ll stay effective and legally defensible practically in perpetuity. We select jurisdictions, banks, and legal language for this effect, accounting for potential changes in tax and inheritance laws and other shifts as necessary.
Contact Dominion Today
At the end of the day, an irrevocable trust could be the best long-term wealth protection and preservation instrument you have available.
As a high-net-worth business owner, doctor, entrepreneur, or other professional, a resilient offshore asset protection trust will be unchangeable while you are alive and long after you pass away.
With an irrevocable trust, you don’t have to worry about the trust dissolving, shifting, or changing in any other way unless you want it to. And with the experts at Dominion working for you, you’ll be able to rest assured your trust documentation outlines the exact procedure you want the trust to go through. Or you can set up your trust so it doesn’t change whatsoever!
Offshore asset protection trust setup is our specialty. Get in touch with one of our representatives today to learn more about how we can help you with your financial goals.