Revocable Trusts vs. Irrevocable Trusts
Many clients who need help with estate planning are understandably overwhelmed at first. After all, there is so much to consider about your final wishes, how your assets are divided and transferred, who will manage your affairs if you become incapacitated, and how to protect your family. There are also many documents — Wills, Trusts, Powers of Attorney, burial directives, etc. Each serves a specific purpose that can be tailored to your situation.
A perfect example is Trusts. Not only are they a unique tool in comparison to a standard Will, but there are many different types of Trusts, including Revocable Trusts and Irrevocable Trusts.
What is a Trust?
Unlike a Will, which only kicks in when you die, a Trust can be created and managed during your lifetime. You control and manage the Trust and all the assets under its umbrella. And when the time comes when you cannot act — either through death or incapacitation — you can legally pass that responsibility to a successor trustee to step in and handle your affairs exactly how you laid out in the document. This includes determining who receives what benefits from the Trust and when.
A Trust is a bit more complicated than a Will, but it has several benefits:
1. Different types of Trusts cater to your needs and wishes.
2. Ability to Avoid Probate.
3. A Trust creates greater control before and after incapacitation or death.
4. A Trust is recognized in all 50 states.
If a Trust is established during your lifetime, it is called a Living Trust. On the other hand, Testamentary Trusts don’t take effect until after you die. If you establish a Living Trust, you can make it a Revocable Trust or Irrevocable Trust.
What are Revocable Trusts?
A Revocable Trust allows you to control all assets held in the Trust during your lifetime. You have complete control over what happens next and can make changes with your estate planning attorney’s help as often as you see fit. So, if you want to eliminate specific property from being under the umbrella of your Trust or add property, you can do that. If you want to take all the property back under your name and end the Trust completely, you can do that as well.
Additional benefits of Revocable Trusts include allowing the person who takes over for you if you become incompetent to do so without court involvement. The same is true when passing assets to your beneficiaries when you die.
What are Irrevocable Trusts?
As the name implies, these types of Trusts cannot be modified, altered, or terminated by you in any way. You appoint someone else to be in control even while you are still alive and could theoretically make decisions for yourself.
While it seems silly and irresponsible to give up so much control over your stuff, there are many distinct advantages:
• The assets in the Trust can be protected from long-term care expenses, creditors, and lawsuits.
• The assets in the Trust can lower your taxable estate after you die.
Call Caitlyn Ashley Law today!
Today’s takeaways are that while Trusts are unique in how they are structured and can seem overwhelming, they are for everyone. Having a plan for the future is the most important gift you can give yourself and your family — and either a Revocable Trust or Irrevocable Trust is a great strategy. Granted, none of us will ever know for sure what is around every corner. And thinking about the what-ifs can be overwhelming. But having a plan that accounts for your family’s unique circumstances, puts your affairs in order, offers solutions, lays out your wishes and goals, and protects your family’s future provides peace of mind for the road ahead.
Caitlyn Ashley Law in Denton, Texas, will counsel you on which documents are best suited for your needs and ensure they are flexible enough to meet your changing needs for years to come.