If you are considering your options for developing an estate plan, you may already be overwhelmed by all the intricacies that can come with this process. Many people know what they want to accomplish with an estate plan, but they are unsure about how to go about legally protecting their wishes.
One thing you may be considering is setting up a trust. But even that can bring up a number of questions that can be difficult for you to answer on your own. There are many different types of trusts, and it can be difficult to know which one might be best for your unique situation. For example, do you know the differences between a revocable trust and an irrevocable trust? Many people do not, so we will take a look at these trusts in this post.
Revocable trusts are also referred to as living trusts. These are set up by a living person and can be modified when, how and if the trustmaker sees fit. However, because the assets in these trusts are still technically owned by the trustmaker, they can still be vulnerable to creditors, should the trustmaker run into financial challenges.
On the other hand, property in an irrevocable trust is no longer owned by the trustmaker, but by the trust itself. This can protect the property from creditors and from being included as part of the taxable estate. However, as the name implies, irrevocable trusts cannot modified, revoked or otherwise changed after it has been created, unless the beneficiary permits the change.
In general, both types of trust can help people avoid probate in some cases and maintain better control over how their assets are managed. A person should explore these and other types of trusts to thoroughly examine the pros and cons of each before making a decision about setting up a trust.
Rather than trying to figure this all out on your own, you may want to discuss your individual case with an attorney who is experienced in estate planning. With the guidance and knowledge of an attorney, you can better understand what is right for you.