Revocable Trusts vs. Irrevocable Trusts
Many people know a Will says where your stuff goes. But far fewer understand how a trust works. Some even have a trust of some sort but don’t really know how it works. But what kind of trust is right for you? That depends largely on your goals. First, all trusts help your estate avoid probate. Trusts also allow you far more control over how your estate is distributed. Special trusts even help provide protection against creditors or losing your assets to a nursing home spend down.
Generally speaking, trusts come in two main flavors: Revocable and Irrevocable. Revocable trusts, as the name suggests, can be revoked as long as the Grantor(s) are of sound mind. Revocable trusts allow your assets to avoid probate process, which is often a big financial savings to your estate. Moreover, a revocable trust provides far more control over how your distributions are made.
Unlike a revocable trust, an irrevocable trust cannot be revoked. So what does this mean? It means that the document will continue to exist for as long as the terms of the trust dictate. More simply, it can’t be terminated prematurely. While the term “irrevocable” may sound scary, a better understanding of this term indicates otherwise. In fact, through careful drafting, an irrevocable trust can meet the goal (asset protection, tax planning) without changing the day-to-day lifestyle of its Grantor(s).
Though it sounds counterintuitive, an irrevocable trust actually allows you far more flexibility in customizing your estate plan to your needs. When used properly, these trusts can be used to protect your assets from the costs of long-term care , to allow for significant tax savings or to provide for the care of a child with special needs without making that child ineligible for helpful public benefits.
If you are interest in starting an estate plan, changing your estate plan, or you have a special situation that needs to be addressed, please do not hesitate to give us a call. Call us at (877) 912-3464 or click here to request a consultation.