Creating an estate plan requires you to think how your assets will be handled after you die. Some people choose to do this through their will, but others opt to use a trust to do this. If you decide that you want to use a trust, you’ll have to decide if the trust should be one that’s revocable or one that’s irrevocable.
Understanding how these trusts function and the differences between them may help you to make a decision about how to move forward with your estate plan.
Asset distribution
One of the primary purposes of trusts is that they get the intended assets to the named beneficiaries without having to go through the sometimes lengthy probate process. Revocable and irrevocable trusts both accomplish that goal. Since they don’t go through probate, there is privacy for the beneficiaries because the terms of the trust aren’t part of the public record.
Revocable versus irrevocable
All revocable trusts can be changed or cancelled, but irrevocable ones can’t. Once you fund an irrevocable trust, you hand over control of the assets to the trustee. Because you don’t control the trust, your creditors can’t stake a claim to the assets. That protection from creditors isn’t present in a revocable trust.
Taking the time to consider every aspect of your estate plan is critical so you can ensure it accurately reflects your wishes. It may be beneficial to work with someone familiar with these matters so they can help you to understand the options and how they will function as part of the estate plan. It’s best to do this as soon as possible so you can ensure your loved ones have it to follow when you pass away.