As you begin exploring your estate planning options on how to protect your assets, you’ll likely consider either revocable or irrevocable trusts. Trusts are an excellent tool for those who want to pass their estates and assets to beneficiaries without having to go through the costly, stressful, time-consuming probate process.
Comparing the benefits and downsides of revocable trusts and irrevocable trusts can help guide you to make the best, most informed decisions for both your family and their future.
An Introduction to Revocable Trusts
Revocable trusts give individuals the most control over their assets during their lifetime. These are the types of trusts that most people create for themselves.
After you establish the trust and transfer assets to it, you can change the trust at any time. You may choose to change the beneficiaries, adjust the terms of the trust, or completely undo it if it no longer meets your needs.
However, as the trustee, you are still considered the owner of those assets. If you have substantial debt, these assets may be seized by creditors if they get a court order. Additionally, the assets in your trust can work against you for Medi-Cal planning.
How Irrevocable Trusts Work
Irrevocable trusts grant individuals much less freedom and flexibility after they are established. The initial process is the same. You establish the trust, set the terms, name beneficiaries, and transfer assets.
However, after that, you give up all control. Once you have transferred assets, you cannot change the terms of the trust, access the assets, or change beneficiaries. While there may be some options to alter the terms of irrevocable trusts, such efforts are not easy.
Advantages of Each Type of Trust
Each type of trust provides different benefits. You have to think about what you are willing to give up and what is non-negotiable for you.
- If you choose a revocable trust, you can rest easy knowing that you have full control over your assets.
- If you need to liquidate them to cover unexpected expenses, the process is relatively straightforward.
- If beneficiaries become estranged, you can remove or add people as necessary.
Both options are viable choices for those with estate planning needs. Consult the team at Werner Law Firm to discuss your options and figure out which type of trust best suits your needs – call us today at 1-800-752-9937.