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Should I have a revocable or irrevocable trust?

| May 14, 2020 | Firm News |

So you’ve heard that you should start thinking about trusts. The first major question that you and your attorney will need to answer is: what kind?

A trust is a place where you can place assets for legal protection. In it, a trustee holds the assets and until they are given to a beneficiary. You, the grantor can make regulations surrounding the assets, trustee and beneficiary. There are two types of trusts: revocable and irrevocable. Each has different benefits and every person needs unique considerations.

Revocable trusts

A revocable trust is one that you can alter or cancel after its creation. The assets that you put in the trust also only officially transfer to the beneficiary after your passing, meaning that you can still access them during your life.

Irrevocable trusts

An irrevocable trust allows you to create a trust that cannot be changed without the permission of the beneficiary. Once you, the grantor, transfer assets into an irrevocable trust, you will not have rights to them or the ability to change the terms of the trust.

Which is best for you?

If you need to later make a change or access assets in the trust, like for payment of medical or nursing home bills, you may need a revocable trust. In this type, the trustee also has power over the trust’s assets if you are incapacitated.

Because assets are no longer considered part of your estate in an irrevocable trust, it can provide protection from creditors and some taxes. This type of trust can also work for giving to charity and may have tax deductions.

Both types of trusts allow your loved ones to avoid probate after your passing, at least concerning the assets that are included in the trust. As you consider which type of trust is best for you, explain your situation to a lawyer to get further insight.