Many people know that creating trusts can benefit their estate plan. This is a way that you can transfer assets to your loved ones without having to involve the probate courts after you pass away. There are many different types of trusts that you can establish. All of these are divided into two basic types – revocable and irrevocable.
What is a revocable trust?
A revocable trust is one that you can establish and fund with specific terms and beneficiaries. If the situation changes or you realize that you need to modify something, you can do this if it’s revocable. This type of trust doesn’t provide any protections from creditors, so they should be used only if you’re certain that nobody will attempt to make a claim against your estate. Valid claims that are made against a revocable trust will reduce what your loved ones walk away with.
What is an irrevocable trust?
An irrevocable trust is one that can’t be changed once it’s created and funded. Since the creator of the trust can’t change things in it, the contents of the trust are protected from their creditors. This means that your creditors can’t make claims against what you put in the trust, so you know that it will go down to your heirs when you die.
Trusts can be complex legal arrangements. It’s imperative that you work closely with someone who’s familiar with trusts so you know that the wording and terms are correct. This helps to protect you and your loved ones. You’ll likely feel a sense of peace once you have the trusts set up and your estate plan completed.