Your estate plan serves many purposes, one of which is to ensure your assets are distributed in the manner you choose to the people you intend. You have the option of doing this through a will, which has to go through the probate process. Another option, trusts, can also serve this purpose.
One of the primary differences between using your will or trusts is that trusts won’t go through the probate process. This provides your loved ones with a more private and less costly and less time-consuming way to receive their inheritance. There are many different types of trusts that serve a variety of purposes. Each trust is classified as revocable or irrevocable.
How do revocable and irrevocable trusts differ?
A revocable trust is one that can be changed if you decide the terms no longer convey your wishes. You can also cancel it if you determine that it’s not the best option for handling your assets.
An irrevocable trust is one that can’t be cancelled or changed unless you can get the beneficiaries to unanimously agree to the changes or obtain permission from the court. Because of the permanency of an irrevocable trust, the assets in it are well protected. You don’t have control over these assets so your creditors can’t claim them to satisfy debts or judgments against you.
Trusts are a useful tool to hold and distribute assets. Ensuring that you set them up in the proper manner so they can be legally enforced is crucial. Because these matters can be complex, it’s often best to work with someone familiar with estate planning so they can get everything handled appropriately.