When it comes time to start building your estate plan, the possibilities may seem endless. You have goals in mind. You might have people or interests you want to take care of, but how are you supposed to choose what is right for you?
Today, we will discuss two types of trusts: revocable and irrevocable trusts.
Trusts are legal relationships between someone wishing to submit assets into the trust, the trustor, under the care of a trustee, the person administrating the trust. The trustee provides beneficiaries access to the assets.
With trusts, you could customize things for children, like for them to have access to their portion of the trust at a certain age, in which case the trustee would tend to the assets until that time.
Revocable trusts can be altered at any point after their creation. You can change the assets held within the trust and change the beneficiaries.
Conversely, with an irrevocable trust, assets are moved out of the grantor’s (your) hands and into the trust. Because you no longer maintain ownership, this comes with several advantages and disadvantages.
For example, say you have a business or career, like a doctor or lawyer, prone to lawsuits, when you move assets out of your name and into this trust, the assets are shielded from those lawsuits.
But, these trusts are difficult to change. For example, if you wanted to remove a beneficiary, it often is difficult and will depend on the trust specifics, if it is even possible.
Still not sure?
If estate planning were a restaurant menu, it would have several pages of options. Much like a restaurant, if you have not tried something before, or are not sure if it is right for you, it is a great idea to seek help from an outside expert in estate planning.