Trusts are one way that you can get the assets to your loved ones after you pass away. Since they bypass the probate process, they can be a faster way to get things handed out. Before you set up the trusts and fund them, you need to learn about what protections and limitations they have.
There are many different types of trusts, but they’re all grouped into two categories. They’re either revocable or irrevocable. There are benefits and drawbacks to both types.
How are these 2 trust categories different?
In a revocable trust, the creator is free to modify that trust or cancel it completely. This isn’t the case with an irrevocable trust, which can only be changed if all the beneficiaries agree to the changes. With a revocable trust, the creator remains in control. The terms of the trust guide the trustee’s control of the funds.
An irrevocable trust offers protection from creditor claims since the creator can’t access the contents of the trust. Creditors can come after the contents of a revocable trust. There are also some tax benefits to choosing to use an irrevocable trust to pass assets to your loved ones.
Anyone who’s creating an estate plan should ensure their wishes are accurately conveyed. Having a comprehensive estate plan can accomplish this, but only if you have everything set up in a legal manner. Working with a professional who is familiar with situations like yours can help you to be sure this happens with as little stress as possible. Be sure to review your plan periodically so you know it still reflects your wishes.