There are many reasons why someone may want to set up a trust. Some people are looking to protect their assets from creditors, other people are looking to give minor children a leg up on life, and others are looking to provide a way for people who may not be able to be trusted with inheritances. Whatever your reason for establishing a trust, it’s important to know exactly what they are, what they can offer, and how to make an informed decision.
Revocable trusts are one type of trust. They are designed to allow the person making the trust, known as the grantor, to maintain control over the property while they are alive. After the owner passes away, the assets in the revocable trust pass directly to the beneficiaries without going through the probate process.
Although revocable trusts are very flexible, they do not offer the same level of asset protection as irrevocable trusts. In a revocable trust, the owner’s assets are not protected from lawsuits or creditors. Instead, they are subject to the same estate taxes as other assets. Creditors can still access the assets in the revocable trust and use them to pay off debts.
A revocable trust is a good option for a variety of people. For example, it can be beneficial to individuals who own multiple properties. However, it’s also possible for the owner of a revocable trust to face interference from long-term care assistance later in life. Additionally, a revocable trust could cause a delay in the distribution of assets when the owner dies.
Other advantages of a revocable trust include the ability to change the terms of the trust. The revocable trust can be canceled by the grantor before or after his death. If the grantor decides to cancel the revocable trust, he or she is responsible for paying the taxes that would have otherwise been paid on the trust. It’s also important to note that the owner of a revocable Trust is still liable for tax payments on the property that is owned by the revocable Trust.
Unlike a revocable trust, an irrevocable trust is not easily altered. If the owner wishes to make a change to the terms of the trust, the beneficiary or other beneficiaries must agree. Moreover, changes to the terms of the trust must be approved by a judge.
A revocable trust allows the grantor to remove assets from the trust during his or her lifetime. This may be particularly beneficial to those who have real estate in different states. Similarly, it can prevent the need for a property management guardian.
Lastly, a revocable trust can be used to avoid the costs and delays associated with the probate process. During a probate, the court processes an individual’s will to determine who gets what. Probate proceedings can be lengthy, expensive, and public. Even if a revocable trust has been created, the cost of ancillary probate can be a big concern. Taking the time to ensure that all your heirs are included in the probate proceedings is a very prudent step.