If you are planning your estate, you should understand the difference between revocable and irrevocable trusts and how the two compare. Understanding the differences can help you better protect your assets and avoid probate, while preserving your assets for future generations.
Before you begin your estate plan and choose the type of trust you want, you need to first hire an estate planning attorney who can instruct you on what the best option is. At Morris Estate Planning Attorneys, our collective years of experience in estate planning has allowed us to help our clients navigate the process of estate planning with ease. Keep reading to find out more about revocable and irrevocable trusts.
Revocable Vs. Irrevocable Trusts
During the estate planning process, you will most likely end up comparing revocable and irrevocable trusts. Although these trusts serve different needs, both are able to take the place of a will when it comes to managing property distribution and avoiding probate. To better understand which one is the best option for your situation, you need to look a little further into what each trust actually provides and weigh the pros and cons.
It is highly recommended that you hire an estate planning attorney in Nevada to help you examine what your options are. An attorney will have experience in Nevada estate planning laws and can help you better understand how to go about protecting your assets for future generations and avoiding probate.
Revocable Trust
A revocable trust is a type of trust that you can revoke and amend while you are alive. This allows you to do things such as change the terms of the trust, remove or add beneficiaries, and alter your assets as your situation changes. This also means you have the power to terminate the trust.
Revocable trusts primarily help you bypass the probate process upon your death. They also allow you to effectively set up the distribution of your property to your loved ones when you pass away and allow for someone else to manage the trust assets in the event you become incapacitated. Revocable trusts also do not affect your income taxes while you are alive.
Because a revocable trust can be revoked or amended during your lifetime, this also means that the trust may be subject to your creditors and lawsuits.
Irrevocable Trust
When comparing the benefits of irrevocable trust vs revocable trusts, there are a few significant differences. The defining difference between an irrevocable trust and a revocable trust is that an irrevocable trust typically cannot be revoked or terminated after you execute it. Also, irrevocable trusts typically cannot be amended or altered very easily, and even if they can be, it would typically only be authorized by someone other than you.
Most irrevocable trusts are established to protect your assets from creditors, transfer your assets to other beneficiaries while you are alive, or minimize certain types of taxes. Since irrevocable trusts cannot be revoked or changed as easily, especially by you, they offer more protection from creditors compared to revocable trusts. Irrevocable trusts are also a worthwhile option with people who have large estates, since they can minimize estate taxes and better preserve generational wealth as you pass away.
The main downside to irrevocable trusts is that they are usually more expensive to set up and are they usually require more time, expense, and involvement to administer each year.
Which is Better: Irrevocable or Revocable Trusts?
The main question many Nevada residents have when they are creating their estate plan is which trust is the better option, or should they have both?. The pros and cons of revocable and irrevocable trusts can help you better decide which option is suitable for your situation and your goals. Both trusts will help to avoid probate, preserve privacy, and manage your assets post-death.
Which trust you ultimately choose will depend on your estate and what matters most to you after your death. Some people may want the flexibility of a revocable trust, which allows them to change this document as their situation changes. On the other hand, others may want the security of an irrevocable trust as it provides better safety from creditors, lawsuits, etc. In many instances, both should be considered.
Contact a Dependable Estate Planning Attorney at Morris Estate Planning Attorneys
To better prepare for the future and ensure your loved ones receive their inheritance, you need to have a thorough estate plan in place. As you are planning your estate, you will need to go over the pros and cons of a revocable and irrevocable trust to better decide which one fits your situation.
At Morris Estate Planning Attorneys, our estate planning lawyers are dedicated to providing our Nevada clients with the guidance they need as they take steps to protect their assets and navigate Nevada trust laws. Contact us today at 702-471-0990 to schedule a meeting with one of our attorneys.