Revocable & Irrevocable TrustsTrusts
Chico Revocable & Irrevocable Trusts Lawyer
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Using a 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 revocable and irrevocable trusts lawyer, Ms. Nikki Farris, you can determine which is best for your estate and your interests.
How To Tell If A Trust Is Revocable Or Irrevocable
Revocable trusts, or living trusts, may be modified after they are created. Beneficiaries and how assets are managed may be changed at any time. An irrevocable trust cannot be changed after it is created except under rare circumstances. In addition, the consent of the beneficiaries is required for any changes. There may pros and cons for either choice depending on your situation.
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.
Irrevocable vs Revocable Trust
The difference between irrevocable and revocable trusts lies in the degree of control the grantor maintains over the assets placed in the trust. Revocable trusts enable the grantor to retain control and flexibility over their assets, whereas irrevocable trusts offer greater asset protection at the expense of control. In addition to this, irrevocable trusts are often employed to minimize estate and gift taxes, whereas revocable trusts do not provide the same tax advantages. The selection between these two types of trusts depends on several factors, including the grantor's objectives, the assets they want to transfer, and their general financial and estate planning requirements. Before making a decision on which type of trust to use, it is essential to seek guidance from a qualified Chico trust attorney.
We Help Guide You to the Right Choice!
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 trust attorney at The Law Office of Nikki Farris 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.
“Nikki Farris is very easy to talk to, professional and knowledgeable.” - Rachele T.
“Fast consultation and excellent service.” - Lucian R.
“Nikki was so kind, so compassionate.” - Kali H.