What Is The Difference Between A Revocable And Irrevocable Trust?
Trusts are popular tools for estate planning and a variety of trust instruments are available. Two commonly used tools are revocable and irrevocable trusts. A revocable trust is also known as a living trust with the feature that the terms can be changed at any time. Irrevocable trusts cannot be modified when they are created except under rare circumstances. The terms are considered to be “set in stone” to an extent.
Once the Grantor transfers their assets into an irrevocable trust, they relinquish their rights and control of the ownership of those assets. They give up the ability to do anything with the trust. They cannot cancel or it or make changes to it. A question that arises, then, is, “Why would anyone consider an irrevocable trust?”
Circumstances Where An Irrevocable Trust Might Make Sense
There are some valid reasons to consider creating an irrevocable trust. One is that there may be a misconception about the ability to make changes. It depends on the type of irrevocable trust that is created. An attorney who specializes in revocable and irrevocable trusts can best address that issue and guide a family to the right decision.
The are many potential advantages of an irrevocable trust, with one being that it is not a public record. The terms of the trust remain private. Another is that probate is unnecessary. Other benefits include possibly providing tax protection and asset protection in the event of a lawsuit.
An individual who is on disability and receives income from Medicaid and Supplemental Security Income may be limited by government restrictions placed on income and assets. By establishing a trust, someone in this situation can set up the proper trust that shelters income and assets, so they do not risk losing their government benefits.
An irrevocable trust can also help protect the assets when someone is working in a profession that puts them at high risk for a lawsuit, such as someone working in the health care field. Irrevocable trust attorneys, with a solid understanding of Debtor/Creditor laws, can create an irrevocable trust to protect their client’s assets so creditors, including judgement creditors, cannot touch the assets in the trust.
A feature of both types of trusts, revocable and irrevocable, is the “control the grave” the granter (AKA “creator”) of the trust has as to when and how beneficiaries inherit from the estate.
Depending on how some irrevocable trusts are set up, it may be possible for the grantor to retain the right to make changes about who gets the assets while the grantor is alive and after their death. Creating those terms requires the expertise of an irrevocable trust lawyer.
Different Types Of Irrevocable Trusts For Various Situations
Because there are multiple irrevocable trust services, it is important that you engage the services of an experienced irrevocable trust attorney in Tampa, Florida. Each person’s situation is unique, and the laws in Florida can change over time. An trust lawyer can educate their client about the possibilities, issues, and drawbacks so they can make an informed decision about the benefits of establishing the right type of trust that will meet their needs.
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