Trusts are important legal relationships that involve a Grantor who creates a Trust to hold property, a Trustee who holds or manages the property in the Trust, and a Beneficiary (or Beneficiaries) who eventually receives the property. While there are many types of Trusts, they can usually be broken down into two categories: Revocable and Irrevocable. Below you will find the benefits, disadvantages, and differences between Revocable and Irrevocable Trusts.
A Revocable Trust, as the name implies, allows the Grantor the ability to change the provisions or revoke the Trust at any point up to their death, at which point the Trust will become Irrevocable. A Revocable Trust allows the Grantor to maintain a certain amount of control over the property that’s put into the Trust. Often, they will act as the Trustee of his or her own Trust. When the Grantor dies, the property in his or her Trust can pass to their beneficiaries without having to deal with a possibly intrusive and lengthy Dallas or Collin probate process.
In addition, if the Grantor/Trustee does not wish to manage the property in the Trust, or cannot due to incapacitation, a Successor Trustee named in the Trust document can take over the management of the Trust property. Plano Trust lawyers point out that Revocable Trusts do not afford protection from estate or gift taxes, nor are they likely to shield assets from creditors. Instead, the usefulness of a Revocable Trust resides in its ability to provide steady management of Trust property without the intervention of a court in the case of incapacitation or death, which saves precious time and money, as well as protecting the financial privacy of all those involved.
Once again, the name says it all. An Irrevocable Trust cannot be changed, rewritten, or revoked unless all parties to the Trust are in agreement, and, even then, doing so may prove difficult. Depending on the type of irrevocable trust, the Grantor cannot serve as the Trustee of his or her Irrevocable Trust, meaning the Grantor must give up a level of control over the Trust property. Caution should be taken when deciding on a Trustee of an Irrevocable Trust as the Grantor is giving up such a large degree of control. The Trustee should be someone who can be counted on to follow the terms of the Trust and wishes of the Grantor without any problems. But the good news is that, for those that do not need to worry about estate tax, an irrevocable trust could allow the Grantor to remain the Trustee.
Plano trust attorneys state that the biggest strength of an Irrevocable Trust is that it offers protection from certain taxes as well as creditors. In order to make use of this protection, proper planning with a Plano Trust attorney must be done in order to determine which type of Irrevocable Trust is appropriate for the situation and also to make sure the Irrevocable Trust is funded and managed correctly.
If you have questions on whether a Revocable Trust or Irrevocable Trust is right for you, please contact us at (214) 292-4225 to set up a consultation.