Trusts are excellent estate planning tools that can be used for many purposes. A Trust will allow you to distribute assets to your loved ones without having to go through the lengthy process and expense of probate. Some advantages of a trust include:
- Maintain control of your property throughout your lifetime
- Keep the details of your estate private (probate is public record)
- The fees for the administration of a trust are generally much lower than those involved in a probate
- Restrict when and how your beneficiaries will use their inheritance (this can be accomplished through setting distribution amounts and schedules)
Those benefits aside, Trusts are not for everyone and should be evaluated on a case by case basis. The most common types of Trusts are Revocable Trusts and Irrevocable Trusts. Some differences between the two types of Trusts include:
Revocable Trust – A person has the ability to change the Revocable Trust up until the time of his or her death. This provides the creator of the Trust the flexibility to alter any provisions if they desire, whether there has been a change of heart or a change in circumstances. Since there is flexibility with this type of Trust, personal assets may be available to creditors and will be factored in estate tax obligations. This type of Trust does become Irrevocable upon death.
Irrevocable Trust – Irrevocable Trusts are exactly what the name says – irrevocable. These Trusts may not be changed once they are created. However, these Trusts do offer some financial benefit such as reducing tax obligations and since the assets are no longer considered personal property, they cannot be reached by creditors.
You can also plan for incapacity while possibly saving your family several thousands of dollars and a year or more of time, just by having a Trust. Contact us for your free consultation to find out if a Trust is right for you and your family.