Setting up a trust allows you to ensure those you care about have access to your assets without having to go through the probate process. Trusts have advantages that make them an attractive option, but the different options available can seem confusing.
One key thing to understand is the difference between a revocable and irrevocable trust.
Often referred to as a living trust, a revocable trust allows you to change or adjust the terms of the agreement. This can include changing who you name as beneficiaries and how assets in the trust distribute among them. This flexibility can be helpful in many ways, but keep in mind that assets in a revocable trust remain subject to taxes and expenses that irrevocable trusts may help avoid. When you pass away, your revocable trust becomes irrevocable.
Irrevocable trusts are more rigid and final in nature. Once one is in place, you should not expect changes to it without a lengthy and complex process. Creating an irrevocable trust may help save money on taxes as well as protect your assets in the case of a lawsuit.
Deciding what kind of trust to create
Revocable and irrevocable trusts have different advantages and disadvantages you should consider. Both can work well in helping you ensure that your loved ones have the resources they need once you pass away. Even if you can not yet commit to an irrevocable trust, planning ahead and putting a revocable trust in place gives you increased peace of mind and is more than worth the effort.