Ohio residents who are planning their estates might want to consider creating an irrevocable trust. While an irrevocable trust has a disadvantage over a will or revocable trust in that it cannot be changed, there are a number of advantages to it as well. Furthermore, setting up an irrevocable trust in a will that comes into effect on a person's death allows the trust to be modified during the person's lifetime.
An irrevocable trust can also be created while a person is still alive. The trustee is then in charge of following the trust terms. A trust contribution may count against a person's lifetime gift exclusion, but if it appreciates in value, the estate will not owe taxes.
An irrevocable trust can save on taxes when a life insurance policy is placed in it because it removes the value of the policy from the estate. An irrevocable trust could also be set up to pay income to the creator and donate to charity at the end of a person's life. A special needs trust is an irrevocable trust that can take care of a loved one without affecting that person's eligibility for government assistance while a spendthrift trust can manage money for an irresponsible loved one. Dynasty trusts may preserve wealth across generations.
Trusts are one potential element of the complex process of estate planning. Others include making plans for someone to take over health care and financial decision-making if necessary. Powers of attorney along with living wills address these issues along with a person's wishes for end-of-life care.