When it comes to estate planning, trusts can be extremely beneficial. There are different types of trusts and each type of trust may perform a different function. Living trusts are trusts that you create while you are still alive. Once you sign the trust, it is enforceable. With living trusts, there are two different types. First, is the revocable trust and second is the irrevocable trust. Here are the benefits and disadvantages of both.
Benefits of Different Trusts
A revocable trust’s biggest advantage is that you can change it at any time. It is not written in stone. You can revoke it or modify it at any time. If you want a will that pours over, your assets would then enter a revocable trust. If you die, then all of your assets would become a part of your estate.
An irrevocable trust is a safe trust if you have creditors that may be after your assets. For instance, if you have catastrophic medical bills, you can protect your assets and property within a living trust. You have to establish an irrevocable trust to protect any assets.
Disadvantages of Different Trusts
A revocable trust cannot protect your assets. Since you can change your trust at any time, you technically have control of the assets. This means that creditors can access your wealth if you are behind on medical bills or other debts. If you are worried about lawsuits or if you have catastrophic medical bills, then you may not want to use a revocable trust.
An irrevocable trust may protect your assets, but keep in mind that you can’t change it. This means that you need to have the get the trust right the first time. You want to ensure that you include assets that you need to and that all of the forms and documents are completely valid. Be careful on the terms with an irrevocable trust because this is a trust that you can’t amend or revoke later.
If you are considering a trust, you need to figure out if revocable or irrevocable would work best for you. If you are on the fence, you may want to speak with an estate planning lawyer. A lawyer can go in-depth on the benefits and disadvantages of all living trusts. He or she can address your concerns regarding your estate plan. Contact an estate planning lawyer in Austin, TX, like Gray & Becker, P.C.,our office with all your questions regarding estate planning and administration.