A common element in an Estate Plan is a Living Trust. Trusts can be Revocable or Irrevocable. The difference between the two is all in the name, one can be revoked (terminated) or amended (changed) by the creator, the other cannot. With an Irrevocable Trust, the creator cannot make changes without the consent of the beneficiaries. He/she relinquishes all rights to the assets. There are some benefits to doing this, usually as a way to avoid certain taxes at death or to remove assets that may otherwise have been used for Medicare proceedings. With a Revocable Trust, the creator retains the rights to manage the assets and can remove assets from the trust at any time. Trusts can also be set up to pass funds to charities over time which also carry tax benefits. Either way, creating a Trust will save you and your loved ones money and time in the long run.
The main benefit of a Revocable Trust is the protection it provides by ensuring that the creator’s wishes are implemented if incapacitated. Revocable trusts are also used to avoid probate (the lengthy and costly court process when someone dies without an estate plan) whereby the terms of the trust continue without delay of probate or Will challenges from beneficiaries. Irrevocable Trusts, on the other hand, come with creditor protection. Assets titled in your name are subject to creditors, including ex-spouses and taxing authorities. Assets titled in the name of an irrevocable trust, in many instances, are protected from the reach of creditors or, at minimum, provide hurdles for the creditor that may prompt settling the claim for pennies on the dollar. There are several ways to modify a trust to increase control over your assets and ability to retain your beneficial interests, while at the same time providing creditor protection and substantial tax savings.
Contact our firm today to learn about our Estate Planning package and the Trusts that are included in them. If your main goal is to plan for incapacity, you may only need a Revocable Trust. However, if your main goal is creditor protection and tax-savings, an Irrevocable Trust may be your best option.
Call First Class Counsel to learn more about our Revocable and Irrevocable Trusts. Find out which is best for you and your loved ones’ protection.