A properly funded trust allows you to avoid probate, minimize taxes, organize and maintain control of your estate, and provide for yourself and your heirs. In its simplest terms, a trust is a book of instructions wherein you tell your trusted people what to do and when to do it.
While there are many types of trusts, the major distinction between trusts is whether they are revocable or irrevocable. Let us take a look at both so you will have the information you need:
A revocable trust is also known as a “living trust” because it can benefit you during your lifetime and you can change or cancel it if your circumstances or goals change. You stay in control of your revocable trust and you can also transfer ownership of property into the trust and take it out. Additionally, you can serve as the trustee (the individual in charge of managing the accounts and property owned by the trust) and be the beneficiary. You have full control, which is the feature clients usually like best about a revocable trust.
When you set up the revocable trust, you select back-up trustees to manage the trust if you become unable to do so and when you die. This way, you, not the courts, select who is in charge when you need help.
The accounts and pieces of property owned by the trust avoid the probate process. This is because although you may die, a trust never will. The trust will continue to be the owner of the accounts and property until the trustee has been instructed by the trust document to transfer those accounts and property to the intended recipients. By avoiding probate, you are saving your loved ones time and money, as well as keeping the details of your estate plan private.
You also determine how your beneficiaries will receive their inheritance. If your beneficiary is young, going through a divorce, bad at managing money, or has a possibility of being sued, a properly drafted trust can protect the money and property you leave for them.
Similar to a revocable trust, when an irrevocable trust is used, money and property is transferred out of the trustmaker’s individual name and into the name of the trust. However, with an irrevocable trust, you, as the trustmaker, cannot alter, change, or cancel this trust after it has been signed. In order to maximize the benefits of an irrevocable trust, you usually cannot control what happens to the money and property once it is given to the trust.
Accounts and property owned by an irrevocable trust have increased protections from creditors and lawsuits. Your personal tax liability can also be reduced because, in most cases, the accounts and property owned by the irrevocable trust are no longer part of your estate. In some cases, a trust protector can modify your irrevocable trust if there is a change in circumstances and your initial goals for the trust become frustrated.
Consult with Our Seasoned Estate Planning Lawyers Today
As experienced estate planning attorneys, our legal team at Legacy Law Centers can help you figure out whether a revocable or irrevocable trust is a good fit for you and your loved ones. We understand that you are concerned about the well-being of your loved ones after you die, and we are prepared to provide you with the reliable counsel you need to make informed decisions to protect your legacy.
Call us today at (571) 777-1000 or contact us online to set up a virtual or in-person meeting.