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What is the Difference Between Revocable vs. Irrevocable Trusts?

Loune-Djenia Askew, Esq.

Mar 13, 2024

Estate planning is an essential process for asset management and future planning, with revocable and irrevocable trusts being two primary options available to individuals.

Revocable Trusts

A revocable trust is a flexible estate planning tool that allows you to maintain control over your assets during your lifetime. You can alter or revoke this type of trust at any time, making it a dynamic option that adapts to changes in your life. Its advantages include:

  • Avoiding Probate: Assets in a revocable trust bypass the probate process, which can save time and money after your death.

  • Privacy: The terms of a revocable trust are not public record, unlike a will, offering greater discretion over your estate.

  • Flexibility: You can change the terms of the trust at any time, allowing you to respond to new circumstances or financial changes.

Irrevocable Trusts

An irrevocable trust is more permanent. Once established, you generally cannot make changes without the beneficiaries' consent. This type of trust is particularly effective for:

  • Tax Benefits: Assets placed in an irrevocable trust are no longer part of your taxable estate, which can result in significant tax savings.

  • Asset Protection: The assets are safeguarded from creditors and legal judgments since they are not considered your personal property.

  • Eligibility for Government Benefits: Transferring assets to an irrevocable trust can reduce personal asset levels and help you qualify for government programs like Medicaid.

Deciding between a revocable and irrevocable trust involves balancing the need for control with the desire for asset protection and tax benefits. Factors to consider include your estate planning objectives, the importance of flexibility, tax implications, and the need to shield assets from potential future liabilities.

Both types of trusts serve different estate planning strategies and come with their own benefits. Consulting with an estate planning attorney is crucial to tailor your estate plan to your specific needs, ensuring your assets are managed and dispersed according to your long-term wishes.

For more information, contact our office at Askew & Associates, P.A. by calling 954-546-2699. Disclaimer: This blog post is not intended to be legal advice. We highly recommend speaking to an attorney if you have any legal concerns.

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