Trusts allow you to avoid probate, minimize taxes, provide organization, maintain control, and provide for yourself and your heirs. In its most simple terms, a trust is a book of instructions wherein you tell your people what to do and when.
While there are many types of trusts, the major distinction between trusts is whether they are revocable or irrevocable. Let’s take a look at both so you’ll have the information you need:
Revocable Trusts. Revocable trusts are also known as “living trusts” because they benefit you during your lifetime and you can alter, change, modify, or revoke them if your circumstances or goals change.
- You stay in control of your revocable trust. You can transfer property into a trust and take it out, serve as the trustee, and be the beneficiary. You have full control. Most clients like that.
- You select successor trustees to manage the trust if you become incapacitated and when you die. Most of our clients like that they, not the courts, select who’s in charge when they need help.
- Your trust assets avoid probate. This makes it difficult for creditors to access assets since they must petition a court for an order to enable the creditor to get to the assets held in the trust. Most of our clients want to protect their beneficiaries’ inheritances.
Irrevocable Trusts: When irrevocable trusts are used, assets are transferred out of the trustmaker’s estate into the name of the trust. You, as the trustmaker, cannot alter, change, modify, or revoke this trust after execution, except to change the trustee or modify the beneficiaries. It’s irrevocable and you usually can’t be in control.
- Irrevocable trust assets have increased asset protection and are kept out of the reach of creditors, including nursing homes.
- Taxes may be reduced because the irrevocable trust assets may be excludable from your taxable estate.
- Trust protectors can modify your trust if your goals become frustrated.
As an experienced estate planning attorney, I can help you figure out whether a revocable or irrevocable trust is a good fit for you and your loved ones. Call today to set up a meeting.