What’s the Difference between Revocable and Irrevocable Trusts? – Annapolis and Towson Estate Planning
A trust is an estate planning tool that you might discuss with an experienced estate planning attorney, beyond drafting a last will and testament.
KAKE.com’s recent article entitled “Revocable vs. Irrevocable Trusts” explains that a living trust can be revocable or irrevocable.
You can act as your own trustee or designate another person. The trustee has the fiduciary responsibility to act in the best interests of the trust beneficiaries. These are the people you name to benefit from the trust.
There are three main benefits to including a trust as part of an estate plan.
- Avoiding probate. Assets held in a trust can avoid probate. This can save your heirs both time and money.
- Creditor protection. Creditors can try to attach assets held outside an irrevocable trust to satisfy a debt. However, those assets titled in the name of the irrevocable trust may avoid being accessed to pay outstanding debts.
- Minimize estate taxes. Estate taxes can take a large portion from the wealth you may be planning to leave to others. Placing assets in a trust may help to lessen the effect of estate and inheritance taxes, preserving more of your wealth for future generations.
What’s the Difference Between Revocable and Irrevocable Trusts?
A revocable trust is a trust that can be changed or terminated at any time during the lifetime of the person making the trust. When the grantor dies, a revocable trust automatically becomes irrevocable, so no other changes can be made to its terms.
An irrevocable trust is essentially permanent. Therefore, if you create an irrevocable trust during your lifetime, any assets you place in the trust must stay in the trust. That is a big difference from a revocable trust: flexibility.
Whether a trust is right for your estate plan, depends on your situation. Discuss this with a qualified estate planning attorney. This has been a very simple introduction to a very complex subject.
Reference: KAKE.com (March 31, 2020) “Revocable vs. Irrevocable Trusts”
Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys