Getting an estate plan together is a complex undertaking for adults, especially if they’re creating their first plan. One of the primary considerations involved is figuring out how to pass along assets to their chosen beneficiaries. This is most commonly done via a will or trusts.
If you opt to establish trusts to hand down assets, you’re going to have to determine what type of trust to use. As part of this decision, you’ll have to determine if you want revocable or irrevocable trusts. While they have the same purpose, to pass down assets, there are some important differences.
Ability to change the trust
You can change the terms of a revocable trust. This provides you with some flexibility to alter the trust as necessary. You can’t make changes to an irrevocable trust. The only exception to this is if the court order changes or all beneficiaries agree to the changes of the irrevocable trust.
Privacy for beneficiaries
Irrevocable and revocable trusts provide more trust for beneficiaries than what’s present if you pass assets to them in a will. Your will has to be filed in probate court, which means that it becomes a public record. Trusts are handled directly by the trustee who finds beneficiaries and gives them what they’re due. The terms of the trust aren’t filed with the probate court so beneficiaries can keep what they got private.
Protections for assets
Irrevocable trusts provide protection from creditors, so they can’t stake a claim to anything that’s contained in the trust. This is because you don’t control those assets any longer. Because you retain control of the assets in a revocable trust, creditors can try to claim these if you have a court judgment against you.
Creating a comprehensive estate plan can make things easier for your loved ones when you pass away. Having a legal assistant to work with you to get this done can help you to learn your options so you have peace of mind knowing that your wishes are conveyed in a lawful and upholdable manner.