When you are looking at estate planning, creating a trust is vital. Most people use trusts as a helpful tool to distribute their estate after they are gone, especially if they have a considerable one. However, there are differences between the two main types of trusts, and it is good to know which one is for you.
A basic way to think about this type of trust is that you can change it. Sometimes called a living trust, due to its ability to be ever-changing, you can also revoke it entirely. These types of trusts are great for individuals who have reason to believe they may want to modify any terms originally laid out, or like to have complete control over changing any detail later.
This style of trust is one that you nor anyone else can change after you draw it up, as the assets remain safe within the terms laid out. Individuals who have a sizeable estate may benefit greatly from this, due to the benefits that creating this type of trust creates. There are a few benefits to having an irrevocable trust, including:
- Protection from creditors
- Tax benefits by reducing the visibility of your estate
- Government benefits, including Medicaid and social security
If you have not set up a trust, it may be wise to do so, to ensure your estate is handled properly when you are gone. Both revocable and irrevocable trusts are good options, and it is important to decide which one is right for you.