What’s the Difference Between Revocable and Irrevocable Trusts?
Trusts are legal documents used in the estate planning process, and they are held in a fiduciary relationship by one party for the benefit of another party. A trust can be created during a person’s lifetime and survive after death, or it can be created by a will and carried on after death. Any assets that are placed in a trust actually belong to the trust itself, and they remain subject to any rules or agreements of the trust contract. There are two main types of trusts; one type is revocable and the other is irrevocable.
What Are Revocable Trusts?
The word “revocable” means alterable or changing, so a revocable trust is created during the lifetime of the trust maker and can be altered or modified entirely. Also referred to as a living trust, these are trusts that allow the trust maker to transfer the title of a property to a trust and remove the property from the trust while he or she is still alive. A revocable trust is a great option if you want to avoid probate and you want to protect your assets from being subject to probate. However, revocable trusts do not protect your assets, because the assets inside of the trust will remain available to the trust maker’s creditors.
What Are Irrevocable Trusts?
Irrevocable trusts are the opposite of revocable trusts, so they are trusts that cannot be altered, changed or modified after its creation. Once any property is transferred to an irrevocable trust, no one can take the property out of the trust, including the trust maker. However, these trusts do provide asset protection, because the grantor no longer owns the assets. The assets would only belong to the independent trustee, who then can manage the assets for any beneficiaries involved in the trust.
The attorneys at Fiore & Barber, LLC can help you through the complicated estate planning process, including helping you decide which trust might be right for you. Contact us today for a free consultation.
