Revocable trusts, commonly referred to as living trusts, offer ways for their creators to manage and protect their assets. As reported by U.S. News, you may create a revocable trust and name yourself as trustee. Because a living trust is revocable, you may change its contents while alive.
If you create an irrevocable trust, however, you give up control and ownership of your assets. By placing your assets in an irrevocable trust, they become the trust’s property. You may not make changes to the trust. The assets also may not become part of your taxable estate when you die.
What may I accomplish with a living trust?
Trust creators, also referred to as grantors, may retain ownership of assets that they hold in a living trust. Assets may pass to their heirs after death without probate. The law allows transferring retirement accounts such as an IRA or a 401(k) to a revocable trust.
A living trust, for example, may safeguard your properties from an heir’s creditors. Grantors may name successor trustees and leave written instructions to manage their trusts when they no longer can.
What may a trustee do with my assets after my death?
As noted by USA Today, your trust documents give a trustee the authority to maintain its existence after your death. An agreement may specify what you wish for a trustee to do. After you die, your trustee may use cash or other assets in your trust to produce income. You may also specify how to manage real estate for the benefit of your heirs.
Differences between a revocable trust and an irrevocable trust include making changes. If you wish to modify assets during your lifetime, you may need a living trust. While grantors may not revise an irrevocable trust, it may help their heirs avoid probate and reduce estate taxes.