Revocable & Irrevocable Trust

Revocable Trust:

A revocable trust, often referred to as a living trust, is a legal arrangement where a person (known as the grantor or settlor) transfers assets into a trust during their lifetime. The key features of a revocable trust include:

1. Control and Flexibility: The grantor retains full control over the trust assets and can amend, modify, or revoke the trust at any time during their lifetime, as long as they are mentally competent to do so.
2. Asset Management: The grantor typically serves as the trustee initially, managing the trust assets and making decisions regarding investments and distributions. The grantor can also appoint a successor trustee to manage the trust assets if they become incapacitated or after their death.
3. Probate Avoidance: One of the primary advantages of a revocable trust is that it allows assets to pass to beneficiaries without going through the probate process. This can save time, reduce costs, and provide privacy, as the trust document remains private and does not become part of the public record.
4. Incapacity Planning: A revocable trust includes provisions for managing trust assets if the grantor becomes incapacitated or unable to manage their affairs. The successor trustee steps in to manage the trust assets according to the grantor's instructions.
5. Estate Planning Flexibility: Revocable trusts are versatile and can be used to achieve various estate planning goals, such as providing for minor children, planning for blended families, or supporting beneficiaries with special needs.
6. Privacy: Revocable living trusts are private documents and do not become part of the public record upon the grantor's death, unlike wills which are subject to probate and public scrutiny.

Irrevocable Trust:

An irrevocable trust is a legal arrangement where the grantor transfers assets into a trust, and thereafter, the terms of the trust cannot be changed or revoked by the grantor. Key features of an irrevocable trust include:

1. Permanence: Once assets are transferred into an irrevocable trust, the grantor relinquishes control over those assets. The terms of the trust, including beneficiaries and distribution provisions, cannot be altered without the consent of all beneficiaries and the trustee (if permitted by the trust document).
2. Asset Protection: Irrevocable trusts are often used for asset protection purposes, as assets held in the trust are typically shielded from creditors and legal claims against the grantor.
3. Tax Planning: Irrevocable trusts can be designed to minimize estate taxes, gift taxes, or generation-skipping transfer taxes by removing assets from the grantor's taxable estate. Certain types of irrevocable trusts, such as irrevocable life insurance trusts (ILITs) or grantor retained annuity trusts (GRATs), are commonly used for tax planning purposes.
4. Medicaid Planning: By transferring assets into an irrevocable trust, individuals may be able to qualify for Medicaid benefits while preserving assets for their beneficiaries.
5. Charitable Giving: Charitable trusts, which are typically irrevocable, allow individuals to donate assets to charity while potentially receiving tax benefits during their lifetime.

Choosing between a revocable and irrevocable trust depends on individual circumstances, including estate planning goals, asset protection needs, tax considerations, and personal preferences regarding control over trust assets. 

Contact Will and Trust Planning Today

For personalized advice on estate planning, including strategies to minimize or avoid probate, contact Will and Trust Planning today. Our experienced estate planning attorneys can help you understand your options, draft essential documents, and create a plan that protects your assets and achieves your goals.