What it comes to estate planning, two little letters make a big difference! There are major differences between a revocable trust versus an irrevocable trust, and it’s important that you understand the differences so you can make the right estate planning decisions to protect your loved ones.
A trust is an estate planning document that is created when someone known as the trustor transfers current ownership of his or her property to a trust for the benefit of another person known as a beneficiary. The trustee is responsible for managing those assets until the person who created the trust dies, at which point they are given to the beneficiary according to the terms of the trust.
So what is the difference between a revocable trust and an irrevocable trust?
A revocable trust can be changed or updated at any time while you’re still alive. When you die, a revocable trust automatically becomes an irrevocable trust. With a revocable trust, the person who created the trust can add or remove beneficiaries, change trustees, add property or sell trust property, or terminate the trust entirely. As long as these changes are made while the grantor is still mentally competent, the trust creator is free to update their trust at any time.
Creating a revocable living trust is a common way to manage your assets during your life and keep them out of probate after your passing.
An irrevocable trust cannot be changed, modified, or terminated by the person who created it – the only one who can make changes to an irrevocable trust are the beneficiaries. To change an irrevocable trust while the creator is still alive would be a complicated legal process.
There are many estate planning benefits to creating a trust, primarily to protect your assets from taxes and to protect your assets from your beneficiaries. A trust is a good alternative to a will for many people with considerable assets, or who need to protect their heirs. There are different benefits to creating a trust versus a will. You need to consider the same estate planning issues for both a trust and a will. An experienced trusts lawyer can examine your situation, the types of trusts that meet your goals, and explain how a trust can help to meet your goals for the future, and what type of trust is best for your situation.
Do you have questions about protecting your loved ones after you are gone? Our experienced estate planning attorneys in Cook, Dupage, Kane, Lake, and Will counties in Illinois can advise you on the best options to protect your assets and loved ones. To talk to an estate planning attorney contact the Estate & Probate Legal Group at 630-687-9100.