Trusts are created to hold property and provide for beneficiaries in accordance with the terms set forth therein. Massachusetts residents who choose to use trusts do so for many reasons such as avoiding probate, estate taxes or the reach of creditors. If estate taxes and creditors are not a primary issue, then using a revocable trust or irrevocable trust can help avoid probate.
A revocable trust is often referred to as a living trust since they are created and funded during the creator of the trust’s lifetime. The benefit of this type of trust is that changes can be made to it or it can even be revoked while the creator of the trust is still alive. Any assets transferred into the trust during life will not be subject to probate upon the individual’s death.
In most cases, when the creator of a revocable trust passes away, it automatically becomes an irrevocable trust. This means that it can no longer be altered or revoked in any way until or unless the trust terminates according to its provisions. Some people choose to set up irrevocable trusts from the start in order to avoid property being removed from the trust since, once an asset is transferred into an irrevocable trust, it must remain an asset of the trust.
There are numerous other types of trusts besides the revocable trust or irrevocable trust that may be used depending on a Massachusetts resident’s estate planning goals. Those goals along with the family dynamic and other factors will help determine what type of trust will work best for an individual. It may be beneficial to seek out advice and assistance with the creation of a trust to be sure that it meets your needs.
Source: FindLaw, “Types of Trusts“, , Sept. 2, 2014