Revocable & Irrevocable Trusts
Chico Estate Planning Attorney
trust over a
will as part of your
estate plan has its benefits, but it is important that you know exactly what your
trust can and should do. In particular, you should know the differences
between a revocable trust and an irrevocable trust. With the help and
guidance of our Chico estate planning lawyer,
Ms. Nikki Farris, you can determine which is best for your estate and your interests.
Contact us today and we can get to work on reviewing your estate to choose the right
trust type for you.
What is a Revocable Trust?
Sometimes called a living trust, a revocable trust can, more or less, be
altered at your own discretion and with little to no much interference
from third parties. If you need to modify your estate plan and have used
a revocable trust, creating a trust amendment should be all you need to
do. The flexibility and non-permanence of a revocable trust also means
that it is more susceptible to outside influences.
If you are sued and ordered to pay the plaintiff, creditors can get their
hands on estate property included in just a revocable trust. If you require
Medicaid benefits, your living trust assets can be used to help pay for
costs. Furthermore, your estate will be taxed more heavily from state
and federal levels if you have only used a revocable trust.
There are three main benefits to revocable trusts to consider:
Incapacity planning: If you become incapacitated to the point where you can no longer make decisions
for yourself, your assets within your revocable trust will be controlled
by a trustee you have selected beforehand instead of a guardian appointed
by the court.
Probate avoidance: Estate assets kept in a revocable trust will transfer straight into the
hands of named beneficiaries without needing to go through probate, speeding
up the inheritance process.
Privacy: Wills going through probate are opened up to the public. Keeping your assets
in a living trust keeps your personal matters private. This can afford
you welcome peace of mind.
What is an Irrevocable Trust?
As the name suggests, an irrevocable trust is a form of trust that is difficult
to adjust once it is completed and signed. The rigidity of an irrevocable
trust means that you must be certain it is drafted exactly to your standards
before finalizing it, or else you could be faced with complications and
high costs to change it later. Always draft and review your irrevocable
trust with the help of a professional estate planning attorney to avoid
unnecessary troubles in the future.
Irrevocable trusts do come with advantages caused by their inflexibility:
Tax breaks: Once you place assets into an irrevocable trust, they are largely not considered
to be “yours” anymore and instead belong to the trust itself.
When you pass away, your estate will be taxed but not your trust. Putting
most, if not all, of your assets into an irrevocable trust should incur
smaller taxes and provide more for your named beneficiaries.
Asset defense: If assets in a revocable trust can be vulnerable to lawsuits and debts,
it can be said that assets in an irrevocable trust are invulnerable to
these same troubles. By surrendering control of your assets to an irrevocable
trust, you simultaneously shield them from the hands of others.
Charity: You can assign assets in your irrevocable trust directly to charity. Not
only will this help out the charity of your choice with welcome contributions
but it will also give you a charity tax break the year you make the assignment.
If you set up your irrevocable trust to donate portions of your estate
to charity when you pass away, your entire estate will receive a tax break.
We Can Help You Reach a Decision
Your choices of trusts – revocable or irrevocable – may be
laid out right in front of you but the best option may still be understandably
unclear. Allow our Chico estate planning attorney to step in, review your
estate and assets, and help guide you to the right choice. When you work
with us, you will see that we genuinely care about you and your family’s
wellbeing, and that we want to see you comfortable and satisfied with
our legal services.
You can contact us
today and request a free initial consultation with our team to begin.