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Revocable versus irrevocable trusts: Which do you need?

On Behalf of | Apr 25, 2022 | Estate Planning

Putting assets into a trust can keep them from needing to pass through probate. This can speed up the transfer of assets when you die. Yet not all trusts are the same. While there are plenty of specialist trusts available to fulfill specific purposes, the basic trusts you want to consider first are revocable and irrevocable.

Revocable trust

The big advantage of these is flexibility. You can change your mind and alter how you want assets in them to be distributed as you advance through life. You can even take assets out of it if you choose or cancel the trust altogether.

Once you die a revocable trust will usually convert to irrevocable status, thus the trustee will manage the assets according to the last set of instructions you left in the trust document.

Yet before that change can occur the estate executors needs to see if any creditors make claims to your estate. The main disadvantage of revocable trusts comes if you die owing money. Creditors may be able to claim the assets within it, diminishing what makes it into your heir’s hands and slowing the overall transfer.

Irrevocable Trusts

These trusts will protect your assets from creditors, but once you create the trust you cannot alter it, take assets out of it or cancel it. So you are sacrificing flexibility for security.

An effective estate plan may require far more than a will. If you believe a trust could play a role in your estate plan, get help to understand more about the various options available.