One of the decisions you have to make when you are creating an estate plan is whether you are going to establish a trust or not. There are many different types of trusts; however, they all fall into one of two possible categories. They are established as either revocable or irrevocable.
A trust is an estate planning tool that makes it easier to transfer assets to your heirs. Unlike the will, assets that are held in trusts don’t go through the probate process. Instead, they move to the heir through a trustee.
When you are trying to determine what type of trust to establish, you will work with your estate planning attorney to discuss your goals for the trust and the circumstances of the person who you are leaving it to.
A revocable trust is one that can be changed at any point that you deem necessary. You can change the beneficiary or the terms. The downside to this type of trust is that the assets in it aren’t shielded from creditors. This means that it is possible for a creditor to stake a claim on it, and your heirs won’t be able to enjoy the benefits of it.
An irrevocable trust is one that can’t be changed. Once you create it, the trust owns the assets until they are passed along to the heir when it is time. This type of trust offers protection from creditors, so many individuals choose this type of trust since they can be sure their loved ones will be the ones who benefit from it.