Revocable Trust vs. Irrevocable Trust?
Do you want to avoid probate, minimize taxes, provide control and maintenance for you and your heirs? Then you may want to create a Trust. A trust is really just a set of instructions that direct people you have placed in charge what to do with your assets and when to do it.
But what kind of trust do you need? Well, that really is only a question that can be answered after a consultation with your attorney. However, we can dip our toes into the water a little and discuss some basics. The major distinction between trusts is whether they are revocable or irrevocable.
The living trust is a revocable trust that is set up during your lifetime that allows you to control, change and cancel it for whatever circumstances arise. Here are some aspects of a revocable trust.
● You as the trustee of the trust stay in complete control over any assets you place into the trust. You can transfer items into and out of your trust as you see fit. You have full control over this vehicle.
● Further still, if you should not be able to serve as the trustee you can select the people who will perform those duties for you. Most importantly, it is you and not any court that decides who is in charge of your trust, and the assets you have placed within it.
● One of the main thrusts of a trust is to keep assets and property out of probate. (Note the name of this site). The reason that probate is avoided is that even if you pass away, your trust is its own entity and continues even after your death. The trust will continue to own the property and accounts that were placed in it, and it will have instructions for the trustee on how to act on those assets. By avoiding probate you are allowing your loved ones to spend time grieving and being with family as opposed to trying to figure out what to do in probate. You are also saving a lot of money, and potentially you are saving your real estate from being sold due to the expenses of probate. Finally, everything that happens with the trust is a completely private process.
● Did we mention control? You maintain complete control of how your assets are to be distributed by providing instructions in your trust that guide your trustee. Further still a trust can have mechanisms within it that can protect property from the creditors of your beneficiaries. This type of control is not available when dealing with a will or probate.
Revocable trusts are important vehicles to use to keep your financial life private, grant you control, and protect the things you have worked so hard to acquire.
What is the difference between a revocable trust and an irrevocable trust?\
Irrevocable trusts are quite similar to revocable trusts, the grantor’s property, just like the revocable trust, is transferred into the irrevocable trust. However, the trust maker no longer retains complete control over the assets in the trust. You cannot alter, change, or cancel the trust after the trust has been effectuated. But why would I want to give up control?
● The accounts and property that is placed into an irrevocable trust receives a greater protection against creditors and lawsuits.
● Because the assets are no longer yours, your tax liability if often reduced. In many states the assets you place into an irrevocable trust are no longer part of your estate.
Well- that is all great! But is it worth giving up complete control? Alas, worry not, we still have your back.
● There are some circumstances where a trust protector can modify your irrevocable trust if there is a change in circumstances and your initial goals for the trust become frustrated.
The essence of all this, is no matter what, if you own property you should, almost certainly, be holding that property in a trust. Should that trust be revocable or irrevocable- well it will depend on your circumstances. The good news? As an experienced estate planning attorney, I can advise you and help you figure out your situation. Call us today to set up a virtual or in-person meeting.