5 Differences Between Revocable and Irrevocable Trusts

What Is A Trust?

A trust is a document that provides the rules that you want to be followed for property held in a trust for your beneficiaries (a person benefiting from a trust in some way). Trusts can protect your property, save on estate taxes, and help you avoid probate. They are also an important part of the estate planning process if you want to leave money to your children. Trusts come in various types and there are many things to consider when choosing one.  Revocable and irrevocable trusts are often confused, here are 5 things you should know about these types of trusts:

5 Basics of Revocable and Irrevocable Trusts

  • A revocable trust, also known as a living trust, can be changed at any time. An irrevocable trust generally cannot be changed, amended, or modified after the agreement has been signed.
  • With a revocable trust, a Grantor retains complete ownership of property. With an irrevocable trust, the property belongs to the trust not the Grantor.
  • Property in an Irrevocable Trust is not included in calculations of the total value of property at the time of death. Property in a Revocable Trust will be included in the calculation of the total value of property at the time of death.
  • Property in an Irrevocable Trust is generally protected from creditors and other claimants.
  • The Trustee of an Irrevocable Trust is usually an independent person chosen by the Grantor to manage the assets in the trust and is bound by its conditions. In a Revocable Trust, the Grantor often serves as the Trustee, maintaining control over the assets in the trust.

Do I Need an Attorney for A Trust?

While the legal requirements for drafting a trust can be simple, be aware that one mistake can potentially cause the trust to be invalid. While there are many online do-it-yourself options, they often do not entirely meet the needs of a person, unless those needs are very basic. Do-it-yourself options often do not cover areas such as guardianship of children, property that has appreciated in value or large estates that are subject to estate taxes. These options do not offer legal advice and sometimes do not take into consideration changes in estate planning laws. An experienced attorney can help determine if your needs are basic, offer guidance and clarification of complex estate planning laws, and provide you with ongoing support.

Next Steps for Revocable and Irrevocable Trusts

If you are ready to create a Trust or Will, would like more information, or have further questions please contact us for a free consultation at (914) 228-7448. Parisi, Coan, and Saccocio, PLLC has over 100 years combined experience in estate planning, administration of client’s wishes after passing, and representing litigants in cases of disputed estate matters.

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