The Difference Between a Revocable and an Irrevocable Trust
If you have saved money and acquired assets, you likely know firsthand the work it takes to do so. To make that work matter as much as it can for as long as it can, you need to engage in intelligent, active estate planning. Broadly speaking, wills and trusts are the core components of estate planning, with your will taking effect upon your death and a trust taking place, depending on its type, before or after your death. A living trust, which can go into effect during your lifetime, may be designed to protect assets from taxation and government healthcare programs such as Medicaid and Medicare—thus allowing you to better protect assets for future generations. To create a living trust in California, contact an experienced Fremont estate planning attorney.
A Revocable Living Trust May Be Altered During Your Lifetime
There are two types of living trusts: 1) a revocable living trust, and 2) an irrevocable living trust. With regard to each, if you are the designer of the trust (i.e. the protector of the assets), the legal term for your role is “grantor.” As the grantor of a revocable living trust, you have the power of revocation (another legal term, for change or alteration). The power of revocation allows you, even after creating the trust and filling it with initial assets, to change the trust’s beneficiaries (those you intend to benefit from the assets of the trust) as well as add or remove assets at your discretion. As such, the flexibility inherent in a revocable living trust functions as a tool of asset management to be utilized while you are alive—looking out for the best interests of family and other loved ones in real time as life happens.
An Irrevocable Living Trust May Not Be Altered During Your Lifetime
An irrevocable living trust, as you have likely deduced, cannot be changed or altered after it has been created and received assets. While this lack of flexibility may seem at the outset to be undesirable, a closer look reveals incentives. First, when you give assets to a trust, the assets are no longer titled under your name. They are the property of the trust, and this distinction may facilitate tax avoidance. On the other hand, if a social good is your focus, an irrevocable living trusts presents a good option for giving to charities because the charitable organizations know they can count on the assets entrusted to them, once and for all.
Determining the Type of Trust That Is Right For You
Whether a revocable, irrevocable, or other trust is right for you is a question that involves a close and considered look into the specifics of your estate, wishes, and intended beneficiaries. To plan your estate with a trust, will, or combination of estate planning resources, contact an experienced Fremont living trust attorney.