Irrevocable Trusts in New Mexico

Did you know there are many different types of trusts available for estate planning? Some trusts can be altered after they’re created while others cannot. These unalterable trusts are known as irrevocable, and they’re often useful for mitigating estate taxes and avoiding probate.

Are you unsure if an irrevocable trust is right for you? Making the right decision is crucial in this case, as once an irrevocable trust is created it can be very difficult to change it. An attorney can help you make the best decision, and at Walk-In Wills, we’ll explain your estate planning options in detail so you can feel confident in your choice.

Benefits of Irrevocable Trusts

It might seem like revocable trusts are the best choice, since assets can be added and removed at your discretion. However, people choose irrevocable trusts for the distinct benefits they provide:

  • Protects You Against Creditors – Any assets placed into an irrevocable trust can’t be accessed by creditors. Because ownership changes from the trust creator to the trust itself, they can be included in collection hearings or otherwise sought to recoup a debt. Assets in a revocable trust don’t receive the same protection.
  • Preserves Your Medicare Benefits – People who receive Medicare or disability benefits must make under a certain amount to continue to be eligible. When assets are placed in an irrevocable trust, they don’t count towards income requirements, since they’re not actually owned by the beneficiary.
  • Prevents Misappropriation of Assets – Unlike wills, trusts can be designed to pay out inheritances based on certain criteria. For instance, the trust creator may decide that their children can’t receive their share until they reach a certain age.

Types of Irrevocable Trusts

Testamentary trusts are a type of irrevocable trust. Unlike living trusts, which are created and funded while a person is still alive, testamentary trusts don’t become active until after a person dies. A person must have a will in place to fund the testamentary trust, which means assets are still subject to probate.

Charitable remainder trusts allow you to provide assets to beneficiaries as well as charities you’re passionate about. You can choose to pay heirs first and give the remainder to charity, or pay the charity first, with the heirs receiving the remainder of your estate.

Changing Irrevocable Trusts

While difficult, it is possible to change the terms of an irrevocable trust in some cases. If your beneficiaries all agree to change the trust, the court may grant permission to do so. It’s also possible to update a trust so it has more flexible terms. This is known as decanting, and it’s beneficial for trusts that were created many years ago and have since become outdated.

Fast, Effective Estate Planning

Deciding between trust types, writing a will, and drafting powers-of-attorney should never be approached on your own. At Walk-In Wills, we offer affordable estate planning packages with easy-to-understand rates. Call (505) 903-7000 to schedule your free consultation.

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