DIFFERENCES BETWEEN REVOCABLE AND IRREVOCABLE TRUSTS
When thinking of preparing an estate plan, it is good to know that this process is entirely flexible. This means that whatever goals one wishes to accomplish with an estate plan, it is very possible that these goals can be achieved, if the estate is formatted correctly. Many owners of large estate have heard about the benefits of trusts and how these trusts an manage and allocate assets both now and in the future. There are several different types of trusts, two of which are popular with Florida estate owners.
Two such popular trust options are what are called revocable and irrevocable trusts. Revocable trusts and irrevocable trusts are similar in that they can be created during a person's lifetime and survive the person's death. They both administer the same in that, when assets are allocated to the trust they belong to the trust itself, not the trustee, and remain subject to the rules and instructions of the trust contract. Revocable and irrevocable trusts have some major differences, however.
The main difference between the two types of trusts is that the revocable trust can be modified, or otherwise changed, after the trust has been initiated, often called a 'living trust'. Irrevocable trusts, on the other hand, can never be modified or changed. Depending on the goals of the estate, one type of trust may be preferential over the other since the two trusts can accomplish similar goals, but go about achieving these goals differently. For example, it may be very important for the trustee to have the ability to avoid probate of the trust, therefore the revocable or 'living trust' would be the optimal trust so that assets can be reallocated in the event of probate.
However, it may be very important that the once revocable trust be turned into an irrevocable trust after the death of a trustmaker. This ensures that the goals and means of the trust are carried out in the manner that the trust maker intended, and that the trust is not modified in any way. It is possible to transition a revocable trust into an irrevocable trust when the time is right. Determining what trust is right for you is crucial to proper estate administration and management.
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On behalf of J. Kelly Kennedy, Attorney/CPA, PLLC, which has been acquired by Rignanese & Associates, PLLC.
Source: estate.findlaw.com, "Types of Trusts," Accessed March 13, 2017