At Froerer & Miles, our attorneys can make the estate planning process a simple, efficient affair that ultimately puts your mind at ease. While you don’t have to have an estate plan in place to determine what becomes of your financial assets or property, it is far preferable to have one than leaving matters to the slow, costly, and often ineffectual probate process.
As you plan your estate, one of the options that will be available to you is to place your assets into a living trust. A trust is a document legally declaring that certain assets in your possession are to be placed into a trust for your benefit while you are alive. Upon your death, these assets will then be transferred to the beneficiaries of your choosing.
There are many potential benefits associated with placing your assets into a living trust, but first you must decide which type of trust you want to have: a revocable trust or an irrevocable trust. If you have questions about estate planning and revocable trusts and irrevocable trusts, our Ogden, UT attorneys would be pleased to provide you with the guidance you need. We have extensive expertise in all areas of estate planning, and we can help you decide which type of trust would be best suited to your particular case.
What Are the Differences between Revocable and Irrevocable Trusts?
The fundamental difference between a revocable trust and an irrevocable trust can be inferred from the name of each. In the case of a revocable trust, the grantor can modify the terms of the trust or revoke the trust altogether if he or she pleases, at any time. In the case of an irrevocable trust, the trust generally cannot be modified, amended, or revoked under any circumstances, although there are rare cases in which the beneficiaries may be changed.
What are the practical implications of these differences? Essentially, the assets placed in an irrevocable trust no longer belong to the grantor. In other words, if you place your house, your car, and your other assets into an irrevocable trust, you no longer own them. They are owned by the trust. You can still use them, just as you always have; in terms of your daily life, nothing really will change. However, you will retain none of the assets and, according to the terms of the trust, you cannot regain ownership of them.
With a revocable trust, you will retain ownership of the assets placed in the trust. Why, then, would you want an irrevocable trust? If set up properly, an irrevocable trust provides exceptional protection of your assets. Your property will not be included in the valuation of total assets upon your death; therefore, it will be exempt from estate taxes. It will also be exempt from claims by creditors because ownership of the property will have been transferred to the trust.
On the other hand, if you are not concerned with the protection of your assets, but simply want to circumvent the probate process, then a revocable trust may be the best solution for you.
Learn More about Revocable and Irrevocable Trusts
To learn more about estate planning and revocable and irrevocable trusts, please contact the law firm of Froerer & Miles today.