Trusts are an important part of estate planning. They can be used in place of a will, allow you to protect your assets, and may also be used to transfer assets to your beneficiaries after you pass away. Trusts can be arranged in various ways and provide many different benefits. However, there are different types of trusts that may fit one person’s goals better than another. The two most common are the revocable trusts and the irrevocable trusts.
What is a revocable trust?
A revocable trust is just like what it sounds – it is a trust that is able to be modified or revoked anytime during the settlor’s (the person who created the trust) lifetime. Revocable trusts are often used to avoid probate, as this type of trust is private and is never disclosed to the public. Revocable trusts are also often used for people with minor children – this type of trust allows a settlor to maintain control over the trust and designate a specific age for the children to inherit the property in the trust, even if it is after the settlor has passed.
What is an irrevocable trust?
An irrevocable trust is also just like what it sounds – it is a trust that, once established, is (except in extraordinary circumstances and only then under an order by a court of law) unable to be modified or revoked. Because an irrevocable trust is permanent, the property that is in the trust is no longer considered the property of the settlor. For this reason, irrevocable trusts are often used to minimize estate tax liability as the IRS is unable to tax the property in trust, as it no longer belongs to the settlor. Irrevocable trusts are also often used to protect assets and provide for children or family members with special needs.
There are many complex rules for trusts. If you are considering a trust as a means of estate planning and would like to know which trust is right for you, please don’t hesitate to contact one of our experienced Virginia estate lawyers for a one-on-one consultation at (804) 423-1382 or info@wmmlegal.com. We would like to help.
