When choosing the right way to forgo probate it is important to understand the different forms of trusts that exist. The skilled attorneys at St. Clair law are here to help inform and guide your decision. Often when a person wants to prevent their estate from going into probate often a trust is the correct mechanism for achieving this goal. Everyone estate is different with different needs and wishes. This is why it is best to consult a professional at St. Clair Law before moving forward with any process. Revocable and Irrevocable Trust are two common types of trusts.
Estate Revocable Trusts
Revocable trusts offer a high degree of flexibility and control to the grantor (the person creating the trust). You can modify, amend, or even revoke a revocable trust at any time during your lifetime, as long as you are mentally competent. This makes them an attractive option for many people as their circumstances and wishes change over time
Probate Avoidance and Privacy: Assets held in a revocable trust bypass the probate process, potentially saving time and money, and keeping the distribution of assets private. Probate is the legal process through which a deceased person’s assets are distributed under court supervision. Avoiding probate can also speed up the distribution of assets to your beneficiaries
No Tax Benefits or Protection from Creditors: Since you maintain control over the assets in a revocable trust, these assets are still considered part of your taxable estate upon death. Additionally, creditors can claim against assets in a revocable trust to satisfy any debts you owe
Irrevocable Trusts
Once established, you cannot easily change or revoke an irrevocable trust. The assets placed into the trust are effectively removed from your estate, potentially providing significant tax benefits and protection from creditors. Since the assets are no longer yours, they may not be subject to estate taxes or claims from creditors, making irrevocable trusts a powerful tool for asset protection and tax planning.
Loss of Control: The major drawback of an irrevocable trust is the loss of control over the assets once they are placed in the trust. The trust is managed by a trustee, who is not the grantor, and the assets are controlled according to the terms of the trust. This means you can’t change your mind later and retrieve the assets or alter the trust terms without significant legal hurdles.
Variety of Purposes: Irrevocable trusts can serve many specific purposes, including providing for a special needs beneficiary, asset protection, charitable giving, and reducing estate taxes. There are various types of irrevocable trusts designed to achieve different estate planning objectives, such as life insurance trusts, charitable trusts, and special needs trusts, each tailored to specific goals
Choosing between a revocable and irrevocable trust depends on your individual estate planning needs and goals. If maintaining control and flexibility is important to you, a revocable trust might be the right choice. However, if your primary objectives are to protect assets from creditors and reduce estate taxes, an irrevocable trust could better serve your needs. It is important to consult with a licensed attorney like the professionals at St. Clair Law to best determine the correct structure for your estate.
