Who should have a revocable trust or irrevocable trust?
- Anybody that wants to avoid probate (but there are other ways too…)
- Anybody that is receiving certain government benefits and is expecting an inheritance or settlement
- Anybody with young children (say under 30) and want to continue to control the money.
What is a Trust?
A trust is a “fictional” legal person that holds title to your property. The trustee controls decisions for the property in the trust. If you are confused, then I can’t blame you.
Think of a trust as a bucket that you put your stuff into. Then somebody, called the trustee, has control over the stuff in the bucket. Later the bucket gets poured out to the people you name in the trust.
A revocable trust may be dissolved during the settlor’s lifetime by the settlor.
An irrevocable trust continues to exist until the termination conditions spelled out in the trust are met. It is possible to set these up to where property can be exchanged in and out of the trust, but the trust itself cannot be revoked or modified by the settlor.
Why have a trust?
- Do you want to avoid probate?
- Do you want to minimize estate tax?
- Do you want your assets protected if you can’t protect them?
- Do you want to spread out your gifts to your children until they are more wise and mature?
- Do you want to continue to have control over your stuff?
- Do you want to protect your stuff from a spouse’s next spouse and their children?