When you start making important decisions regarding your estate, you may be overwhelmed by the variety of options available to you. The choices you make during this process can have significant consequences for family relationships, taxes, and the management of your assets after you pass.
With the right legal team by your side, you can explore different trust options and find the best solution for your needs. Ready to protect your assets throughout your lifetime and beyond? Call Hedtke Law Group at 909-579-2233 to schedule a free case evaluation now.
There are several key traits that divide irrevocable and revocable trusts. Some of the most important can be found below.
Perhaps the most important difference is what it takes to modify a trust. Revocable trusts are the clear winner here, as they are flexible and can be modified up until your death. If you want to remove assets and use them to pay for something else, add assets, or clear out the trust entirely, you can. An irrevocable trust is no longer yours to control as soon as it is established. Any modifications to the trust generally require court approval and the approval of the trust’s beneficiaries.
Who Has Access
As the creator of a revocable trust, you have access to it until you pass. Only the trustee of an irrevocable trust can manage it, and the trustee cannot be the same person who established it.
One of the main reasons people choose an irrevocable trust is the significant tax benefits it offers. Assets placed in an irrevocable trust are, for all intents and purposes, no longer yours to use. Because of this, they are generally no longer considered part of your taxable estate. This significantly lowers potential estate taxes, a huge benefit for families that would otherwise be hit hard by estate taxes. Those above the federal estate tax exemption enjoy significant benefits when using an irrevocable trust.
Another benefit that irrevocable trusts have over revocable trusts is creditor protection. If you are at risk of having assets seized by creditors, those that are already in a revocable trust may be safe from seizure. Since they are the property of the trust, not the person who created it, they generally cannot be seized. It’s important to note, though, that creating an irrevocable trust with the sole purpose of avoiding creditors could lead to those transfers being undone and taken by creditors. A revocable trust does not offer protection against creditors. The terms of the trust allow it to be changed or ended at any point by the creator, so you still have control over your assets.
Similarly, an irrevocable trust can be helpful for those who plan on living in an assisted living facility as they enter their golden years. Those with substantial assets can be forced to pay for their own assisted living expenses, which are often costly enough to wipe out an entire estate. Those with assets in an irrevocable trust may be able to have expenses covered by Medicaid.
Start Your Estate Plan With Hedtke Law Group
There are many factors influencing your estate plan, and a strong Inland Empire estate planning attorney can help you sort out the best options for you. Contact us online or call us at 909-579-2233 to set up a consultation.