What Are Irrevocable And Revocable Trusts?
The past year has been difficult for the country and the world. In Florida, more than over 36,000 people have died due to complications from COVID-19. While vaccinations are available, it remains crucial to start planning for your estate and end-of life wishes. This includes drafting or updating a will, creating a durable power of attorney, and possibly creating a trust. Understandably, choosing the right trust for your needs can be confusing. If you have questions about estate planning, contact the attorneys at Strategic Counsel Law Group.
When an irrevocable trust is formed, the grantor, the maker of the trust, relinquishes control of the assets. Instead, a trustee (usually selected by the grantor) is appointed to maintain assets within the trust and also to make distributions. The trustee may be an attorney, financial advisor, or close personal friend of the grantor. Irrevocable trusts are often used to provide for minors, disabled loved ones, avoid estate taxes, or to shield assets from creditors. An irrevocable trust cannot be revoked, amended, or terminated. The funds or assets the grantor has transferred or allocated to an irrevocable trust cannot be removed either by the grantor. Some of the major benefits of an irrevocable trust are asset protection, avoidance of probate and avoidance of potential estate taxes. Some elderly adults and couples approaching retirement may prefer allocating funds to an irrevocable trust. This is because irrevocable trusts provide more asset protection from prying hands and a hands-off approach to asset management despite liquidity drawbacks.
A revocable trust is different from an irrevocable trust because it can be amended during the grantor’s life, multiple times if necessary. It does not become irrevocable until the grantor dies. During lifetime, the grantor retains ownership of the assets and investments and can add or withdraw funds. A revocable trust provides flexibility to the grantor if they are concerned about financial stability or lack of access to liquidity in an emergency. Ordinarily, the funds held in a revocable trust cannot be distributed to beneficiaries until the grantor’s passing. Income or interest gained on trust investments are paid directly to the grantor until their death, not to beneficiary accounts. Often times, the revocable trust contains provisions to help avoid estate taxes upon the death of the grantor. If assets are properly titled in the name of the trust or beneficiary designations direct assets to the trust after death, the trust will avoid probate. A grantor of the trust can provide provisions to protect beneficiaries from creditors and the effects of divorce.
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Forming a trust is dependent upon your needs and the needs of your family. If you have questions about avoiding probate, irrevocable or revocable trusts, or need to revise your estate planning documents, contact the Tampa estate planning attorneys at Strategic Counsel Law Group. Our lawyers are committed to exceeding our clients’ expectations and can assist you with all of your long-term planning and estate law needs. Call today to schedule a consultation.