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What are revocable and irrevocable trusts?

On Behalf of | Apr 15, 2022 | Probates & Trusts

Creating an estate plan gives you the opportunity to care for your family members after your death. You can outline the plan using a variety of tools. Some people use the will, but that’s not the only option you have to pass assets down. You can also establish trusts

One point that you’ll come across when you’re reviewing the various trust types that are available is that they’re all categorized as either revocable or irrevocable. While this might seem like a small matter, it’s actually very important to be sure you choose the best one for your needs. Here are some of the differences between the two:

Making changes is easier with a revocable trust

If you establish an irrevocable trust, you can’t change the terms or beneficiaries unless you have the approval of all parties named in the trust. You can’t even cancel or void the trust without that approval. A revocable trust is one that you can change while you’re still living. You can cancel the trust, revise the terms or change beneficiaries without having to get anyone’s approval. 

Irrevocable trusts are protected against creditor claims

Creditors can make claims against a revocable trust, so there’s nothing protecting your heirs or estate from those creditor claims. An irrevocable trust offers protection from creditors because the creditor doesn’t control the assets in the trust once it’s funded. 

Trusts are only one part of a comprehensive estate plan. Taking the time to ensure you’re setting these up in a manner that accurately reflects your wishes is critical. This is often easier when you work with someone who’s familiar with estate planning matters. Remember to get this done quickly so you have the peace of mind that comes with having your affairs in order.