Irrevocable Vs. Revocable Trusts
Trusts are an incredibly effective legal tool in your estate planning toolbox. There are a number of kinds of trusts and understanding the benefits and drawbacks can help you determine what kind of trust best meets the needs of you and your family. These trusts fall into the categories of revocable and irrevocable. All trusts will allow all of the property in them to avoid probate. This is a huge benefit because it means that your beneficiaries will not have to spend months or even years in probate court waiting for the assets to change hands. Even wills don’t escape probate, so this is a significant advantage. It is made possible by the fact that once you transfer assets and property into a will they become the property of the will and no longer belong to you. For this reason, they do not have to go through probate with the rest of your estate. This also allows for privacy that a will does not. Additionally, trusts may do a better job of protecting your assets from creditors.
What is a Revocable Trust?
A revocable trust is also called a revocable living trust. It gets its name because the testator has a great deal of flexibility to modify and even revoke the trust while they are living. They have the ability to take assets out of the trust as well as to add more assets and property to the trust. They can also alter beneficiaries or add a co-trustee if they wish. Because of the high degree of flexibility, this kind of trust does not come with tax benefits. The primary benefit is being able to transfer ownership of your chosen assets into that of the trust, while still retaining the ability to make whatever changes you want while you are alive. This is the most popular kind of trust.
What is an Irrevocable Trust?
An irrevocable trust, on the other hand, is the least flexible kind of trust. Once you place assets or property in an irrevocable trust, the action is permanent and you cannot change your mind. However, while the drawback for irrevocable trusts is the lack of flexibility, it has many benefits when it comes to taxes. An irrevocable trust effectively acts as a safe haven for all property in it, protecting it from creditors (and even Medicaid). Additionally, the assets will be shielded from gift and estate taxes. If you elect to move forward with an irrevocable trust, it is critical to have an experienced lawyer set it up and walk you through the process to make sure you do not make any mistakes that cannot be undone. An irrevocable trust is not the place to attempt a DIY project.
Contact Mark. R. Manceri and Schedule a Consultation Today
If you are ready to make a comprehensive estate plan that meets all your needs and maximizes your assets, contact Pompano Beach estate and trust litigation lawyer Mark R. Manceri to schedule a consultation today.