Pros of an Irrevocable Trust
1. Reduction in Tax Liability
Once the transferrer transfers his/her assets to an entity, his/her taxes on the estate are reduced. This is because, those assets will no longer be included in his personal assets anymore.
2. Reduction in Financial Liability
By creating an irrevocable trust, transferrer’s assets are protected from his/her financial liabilities. In case he/she defaults, or undergoes bankruptcy, the assets in the irrevocable trust cannot be confiscated for any legal action.
3. Free from Court Intervention
After the death of the transferrer, the court does not need to be involved in the process of transferring of assets, unless some dispute has occurred regarding it.
Cons of an Irrevocable Trust
1. Permanent Transfer of Estate
Because its a permanent transfer, a transferrer cannot change his/her decision of making the transfer.
2. Transferrer Immediately Loses His Right on the Assets
The transferrer loses his right on the assets mentioned in the trust from the moment he signs the trust/document.
3. Transferrer is Deprived of the Income Generated
Not only does the transferrer lose his ownership on the assets, but is also deprived of the income generated from it.
4. Transferrer Cannot Make Any Changes
If the transferrer wants to add or amend something written in the trust, he will not be able to do so.
