Nobody likes to think about what happens when they die or become incapacitate. But at some point, it's important to make sure assets acquired during a lifetime are protected and passed on.
When you do decide to move forward with the creation of a living trust, one of the key things to determine is if you will go with a revocable or irrevocable living trust.
Here are some tips to determining which form of living trust is best to suit your individual needs.
Tip No.1: What is a Revocable Trust?
There are two basic kinds of living trusts: revocable and irrevocable. A revocable trust is simply one where the person who creates the trust-commonly known as the trustor or grantor-can change or revoke any part of the trust during their lifetime.
You still set up the trust with a trustee, usually a family member, and that trustee still has the power to legally manage the assets of the estate during the trustor's lifetime, as well as manage the affairs of the trustee in the case of incapacitation.
The distinction here is that the trustee cannot use the assets for any personal use without written permission to do so from the trust like they can in an irrevocable living trust.
Tip No.2: Revocable Trust Pros
For most people, the advantage of a living trust over a will, is the ability to clearly spell out how you want your assets managed by the trustee. This is far better-and less complicated-than simply ceding assets over.
Another key advantage of a revocable living trust is the ability of the trustee to handle the trustor's affairs if they become sick or disabled.
What separates the revocable version is how much less paperwork is involved in its creation, as opposed to an irrevocable trust.
Tip No.3: Revocable Trust Cons
Because it is revocable, and can be dissolved or changed at anytime, the IRS sees it as fluid. This means any income derived from the trust can be taxes, and payable by the trustee.
As well, revocables won't cure you of any probate costs. Sometimes being flexible comes with a stiff price.
That being said, there's a ton of great info out there to help you in building your trust. Accessing that info will save you on skyrocketing lawyer fees and unnecessary estate taxes.
When you do decide to move forward with the creation of a living trust, one of the key things to determine is if you will go with a revocable or irrevocable living trust.
Here are some tips to determining which form of living trust is best to suit your individual needs.
Tip No.1: What is a Revocable Trust?
There are two basic kinds of living trusts: revocable and irrevocable. A revocable trust is simply one where the person who creates the trust-commonly known as the trustor or grantor-can change or revoke any part of the trust during their lifetime.
You still set up the trust with a trustee, usually a family member, and that trustee still has the power to legally manage the assets of the estate during the trustor's lifetime, as well as manage the affairs of the trustee in the case of incapacitation.
The distinction here is that the trustee cannot use the assets for any personal use without written permission to do so from the trust like they can in an irrevocable living trust.
Tip No.2: Revocable Trust Pros
For most people, the advantage of a living trust over a will, is the ability to clearly spell out how you want your assets managed by the trustee. This is far better-and less complicated-than simply ceding assets over.
Another key advantage of a revocable living trust is the ability of the trustee to handle the trustor's affairs if they become sick or disabled.
What separates the revocable version is how much less paperwork is involved in its creation, as opposed to an irrevocable trust.
Tip No.3: Revocable Trust Cons
Because it is revocable, and can be dissolved or changed at anytime, the IRS sees it as fluid. This means any income derived from the trust can be taxes, and payable by the trustee.
As well, revocables won't cure you of any probate costs. Sometimes being flexible comes with a stiff price.
That being said, there's a ton of great info out there to help you in building your trust. Accessing that info will save you on skyrocketing lawyer fees and unnecessary estate taxes.
About the Author:
Looking to find the best deal on do it yourself living trusts, then visit http://make-your-own-living-trust.com/ to find the best advice on creating and planning an estate to protect your valuable assets from needless taxes.