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Choosing Between Revocable and Irrevocable Trust Planning

ByAngela Stone

Why create a trust? Isn’t a will all I need? While everyone’s situation is different this month’s Legal Brief focuses on revocable and irrevocable trust planning.

What can a trust do that a will does not?

  • Trusts keep your wishes private and allow your family to bypass probate.
  • Further, trusts safeguard beneficiaries and provide detailed instructions on how assets should be managed after your passing.
  • Good trust planning can minimize estate taxes, provide protection for family members with disabilities or other concerns, and provide safeguards if the surviving spouse remarries.
  • Additionally, trusts typically work across state lines, unlike a will that often needs to be updated if you move to another state.

Your trust can be either a revocable or irrevocable trust.

Caution, choose wisely.

Revocable

  • Allows the creator to change or revoke the trust and manage trust assets.

Irrevocable

  • Creator names a trustee to manage trust assets.

While it might be scary to allow someone else control of your trust, know they are bound as a fiduciary to act in your best interest. There are significant consequences if a trustee mishandles assets.

Revocable trusts are more common and generally work for most situations. However, there are some circumstances where an irrevocable trust may be your best option.

For example, one situation conducive to an irrevocable trust comes as you age and require specialized care. With the right amount of planning time assets can be placed within an irrevocable trust several years in advance of seeking to qualify for Medicaid benefits. This serves to protect assets while still being able to access resource or income-dependent assistance. In addition to planning for long term care, irrevocable trusts can also help with specific tax concerns.

When considering any type of trust planning, consult with one of Stone Law’s knowledgeable attorneys. This will ensure your trust works for you and does exactly what you want and need the trust to do. Additionally, a free estate planning consultation with one of Stone Law’s lawyers will make sure your comprehensive plan covers everything you need to have peace of mind.

One final note: it is critical you properly fund your trust. Make sure to include all your assets, including real estate. At Stone Law we include a set of form letters that cover different assets with instructions for how to transfer them into your trust. If you have questions about funding your trust, or encounter problems, reach out to your attorney, financial advisor/planner, or brokerage firm.

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