Should You Consider An Irrevocable Family Trust?

Posted by Winifred "Wini" Cannon | Oct 06, 2020 | 0 Comments

I would say yes. I would say yes if you have more than one piece of property, but this is just a preference. Many people don't want to, it's like six of one and a half a dozen or the other. What the family trust does is it takes your assets and you transfer them while you are alive to the family trust, and then you make designations as to the beneficiary.


Transferring Property to a Family Trust

My real property is currently deeded in my name. However, if I wanted to put it in a trust it would go into the Cannon family irrevocable trust. Then I would have to not only create that, I would have an attorney prepare the trust instruments, but they would also have to prepare the deed transferring the property out of my name into the name of the family trust.

Now this works wonderfully because you don't have to worry about creditors coming after you when you die, because you would have already transferred your assets. So if it's in a family trust, it can't be reached by creditors, so that's the good news.


How Much Property Should You Have Before Getting a Family Trust?

A lot of people are leery about it with one piece of property because they want to show on record that they do own property. Now that's just a preference. I always use three properties as a rule of thumb. You may want to keep one out and put the other two in, or you may just want to put all three in, but you should not have a problem with borrowing, refinancing, or selling. You would just always have to do that in the name of the trust.

So it's a wonderful instrument. It costs more upfront to draft a family trust, an irrevocable family trust. However, you save countless dollars from not having to go to probate and also everything is done at the time of death because your instruments have basically made those designations already.


Why You'll Want a Will Alongside Your Irrevocable Family Trust

One other thing with a family trust is that I recommend that when people decide to do a family trust, I always do a basic will to catch anything that you cannot identify in your family trust. Because say if you have come into any inherited property, you may come into property after you die, so you still need to have a will to catch all of that property. But if there are no assets, then you don't need to probate the will. It's just a precautionary measure. But the beauty of the irrevocable family trust is that you make inter vivos transfers. You transfer everything out of your name while you are alive, and you still can have control over your property, but you protect your assets against creditors.

About the Author

Winifred "Wini" Cannon

Winifred “Wini” Cannon knows how business owners may be impacted when retirement, incapacity, or death occurs without a good plan in place. One example that is very common is in the instance where one partner dies leaving the other trying to stay in business complicated by the...


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