What is the Difference Between Revocable and Irrevocable Living Trust?
Estate planning can feel like a tedious process, given how many decisions are involved. What is the difference between revocable and irrevocable living trusts?
There are many benefits to establishing a living trust over other estate planning documents, such as a will. Living trusts do not go through probate as long as they are fully funded at the creator’s death. Any of the creator’s assets that are not titled to the trust will likely go through probate. Living trusts can also preserve your privacy; while a will is public upon your death, a trust and its contents are generally only available to your beneficiaries. However, there are a few potential downsides to consider when choosing a trust. First, they are more complexities to creating and funding them, so it is recommended to use an estate planner to assist with creating a living trust. Trusts typically also cost more to establish than other options.
Trusts can contain the dispositive provisions of how your assets will be disposed of at your death. Have pets? A trust can say who they go to. Do you have a favorite charity you would like money donated to upon your death? That term can also be included in the trust. Want any money your children receive to be held in further trust? Those instructions can go in the living trust too.
A revocable living trust is a fluid document that can be modified or updated as you see fit, as many times as you would like, as long as you are of sound mind and still living. You can even revoke the trust if you want to do so. If you are the trustee of your living trust, you still manage real estate holdings, investments and financial accounts that are titled in the name of the trust. While you are alive, you are still taxed on any income generated by the assets in a revocable living trust.
In contrast, an irrevocable living trust cannot be changed after its creation. The assets in an irrevocable living trust immediately fall under the management of the trustee you have designated. If you have a large estate, putting some assets in an irrevocable living trust can make financial sense.
If you would like to discuss creating a revocable or irrevocable trust, set up a meeting with one of our attorneys at Brown Law Firm, LLC by calling (303) 339-3750 or visiting our website.