For many, estate planning begins with setting up a trust. Both the revocable
and irrevocable living trusts are good options, but only one is right
for you. In order to make that decision, you need to first know what each one does.
Revocable Trust Versus Irrevocable Trust
A revocable trust is much like how it sounds. After it is created, the
creator can later change their mind regarding not only the people and
property included, but the existence of the trust itself. However, the
real benefit of a revocable trust is that it avoids probate, which means
assets can be distributed faster to the heirs. Furthermore, unlike a will
whose provisions are made public after you pass, a revocable trust remains
private. Finally, while a trust allows you to appoint someone to manage
it if you are incapacitated, since it is revocable, you have the right
to dispute your incapacitation and
remain in control.
An irrevocable trust, on the other hand, is not able to be revoked, much
like its name gives away. Once you put property or assets into it, you
cannot take them back out, they are part of the trust forever. The only
real benefit to this lack of flexibility is that because the property
is now part of the trust, it is not included in your estate's value and thus
immune to estate tax.
Obviously if you have a very large estate, irrevocable trusts are less
of a detriment and more of a benefit. However, for everyone who is not
a millionaire, the flexibility of the revocable trust is almost always
the right way to go. If you are starting your estate planning journey
and need a lawyer to help you through the process,
contact us today.