What is a Revocable Trust?
A revocable trust is an agreement made by an individual during his or her lifetime, naming a trustee and beneficiary. A revocable trust is a trust that can be updated while you’re still alive if you so desire. Revocable trusts are also commonly referred to as living trusts. With a revocable trust, assets are moved to the trust with a change in title of ownership. The trustor retains the flexibility to change or terminate the agreement any time they so choose. It is important to note that a revocable trust does not protect trust assets from the trustor’s creditors.
What is an Irrevocable Trust?
An irrevocable trust is just like a revocable trust, with one major exception. An irrevocable trust cannot be changed once legally put in place. It is permanent and binding. Changing your mind after the fact is not an option. An irrevocable trust moves trust assets irrevocably into a trust, and under no circumstance can the trustor amend or terminate the agreement. Irrevocable trust assets are protected from creditors in certain circumstances, which can be very beneficial under certain circumstances.
How to Decide Between a Revocable or Irrevocable Trust
Both revocable and irrevocable trusts have particular benefits. The ideal choice depends on the goals you wish to achieve by establishing the trust. You will also want to take your overall estate planning into consideration when making this decision. The most basic difference between the two is that assets remain in the grantor’s estate in a revocable trust but move out of the estate in an irrevocable trust. Furthermore, a revocable trust can become an irrevocable trust when the trustor or joint trustor dies. At this point, the trust asset is protected from trustor creditors. When trying to decide between a revocable or irrevocable trust, it is best to speak with a highly qualified and experienced trust attorney.
The trusted attorneys at Dynamic Estate Planning are well versed in both revocable and irrevocable trusts and can help you determine which solution is best for you and your family. Contact a member of our team today!
