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.
Consult a Lawyer & Learn Which Trust is Best for You
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.