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Irrevocable vs. Revocable Trust: How to Decide Which is Best For You
While most people have heard of a trust, the vast majority may not realize that there are various types of trusts. When it comes to estate planning, the types of trusts that are spoken about most often include irrevocable and revocable trusts. It’s imperative to speak with an estate planning attorney to understand the differences between these two types of trusts, so that you can decide which is a better option for you and your loved ones.
What is the Difference?
Both irrevocable and revocable trusts are meant to protect your estate. However, they each do so differently. An irrevocable trust is a type of trust that, once funded and established, cannot generally be changed, except under certain circumstances, but it can predator and creditor protect and it does provide for the avoidance of probate.
A revocable trust is one that can be changed, modified, or revoked at any time and, therefore, cannot predator or creditor protect, but it does provide for the avoidance of probate. This type of trust allows the grantor to maintain ownership of all assets until they pass away. Once the grantor passes away, the trust becomes irrevocable.
Control and Modifications of Your Assets
When deciding which type of trust you’d like to create, it’s important to decide how much control you want over your assets. Is there a possibility that you’d like to later modify or change how much a beneficiary receives? Or would you maybe want to add—or even remove—a beneficiary at some point? Are you trying to protect against future creditors? Are you trying to protect against predators? Are you trying to avoid probate?
Believe it or not, you can maintain control over your assets in either trust – there are only a few trusts where you cannot be the grantor, the trustee AND the beneficiary. However, the extent of such control needs to be determined based upon a review of your assets, your liabilities and what you are trying to accomplish.
And, a discussion regarding the estate tax implications of both types of trust is a must with your estate planning attorney before deciding which best suits your situation
There is no better time than the present to speak with your estate planning attorney regarding a trust for your assets. If you have questions or are interested in setting up a trust, contact us or complete the brief form below to send a message to our legal team.