Including a trust in your estate plan comes with multiple benefits. It saves time, reduces estate taxes and ensures that your assets are distributed according to your wishes. Most importantly, a trust gives you control over your assets even after your passing.
If you are considering including a trust in your estate plan, you may be wondering about the right type of trust for your estate. Most often, you will need to choose between a revocable and irrevocable living trust.
Understanding a revocable trust
If you are looking for a trust that will give you greater control over your assets, then you are better off setting up a revocable trust. This type of trust allows you to modify and even cancel the entire trust if you wish to do so. Additionally, a revocable trust offers the following benefits:
- Add and remove assets from the trust
- Change beneficiaries
- Revise the trust instruments
- Sell off the trust assets
A revocable trust would make perfect sense if you are looking for more control and flexibility over your assets’ distributions.
Understanding irrevocable trusts
Unlike a revocable trust, modifying an irrevocable trust can be quite difficult. Some of the aspects you may not change in an irrevocable trust include:
- The initial instructions on the trust instrument
- The trust’s beneficiaries
- Ability to remove assets from the trust
An irrevocable trust is ideal for grantors who are looking for more tax benefits.
A trust is one of the most important estate planning tools you can ever create. Find out how you can establish a trust document that will reflect your wishes.