Does It Really Matter If You Choose A Revocable Or Irrevocable Trust?

The most attainable New Year’s resolutions are the ones that require “one and done” actions, as opposed to actions that you must repeat every day.  “One day at a time” is your only option if you are trying to achieve sobriety or follow a healthy diet; the things in life that are most worth having require an ongoing commitment.  If your age and financial status are such that your estate plan is a matter of meaningful choice, then you can afford to pick and choose with your New Year’s resolutions, too.  If you have made an appointment with an estate planning lawyer to discuss establishing a trust, then all you have to do is keep your appointment, and then you can spend the rest of the year congratulating yourself on having achieved your New Year’s resolution.  Once you get to the appointment, though, your lawyer will explain that you must choose between a revocable trust or an irrevocable trust.  You can choose the best kind of trust for your estate plan with the help of an Orlando estate planning lawyer.

All Trusts Become Revocable in the End

In the beginning, all trusts were irrevocable.  An irrevocable trust takes on a life of its own once you create it and transfer property to it; you cannot get your property back from the trust unless you dissolve the trust.  It is like watching your estate exist without you even while you are still alive.

It is a scary thought, why is why revocable trusts were invented.  Think of them as trusts for commitment-phobes.  When you establish a revocable trust, you can modify its trust instrument as often as you like.  You have the rest of your life to change your mind about which assets the trust should control, who should dispense them, and who should receive them.  A revocable trust only becomes irrevocable when the grantor dies, and even then, only because the grantor is no longer around to modify it.

You Pay for Your Lack of Commitment at Tax Time

You might think a revocable trust sounds too good to be true, if it gives you all the financial protections of an irrevocable trust with none of the commitment.  In fact, you do not get all of the benefits of an irrevocable trust if your trust is revocable, at least not immediately.  When you transfer assets to a revocable trust, the assets in the trust still legally belong to you.  Therefore, you still count the assets on your income tax returns, just as you would have done if the revocable trust did not exist.  You do not get the tax benefits of a revocable trust until it becomes irrevocable.

Contact Gierach and Gierach About Establishing a Trust

An estate planning lawyer can help you establish a revocable trust, which does not require you to overcome your fear of commitment.  Contact Gierach and Gierach, P.A. in Orlando, Florida to discuss your case.

Source:

metlife.com/stories/legal/revocable-vs-irrevocable-trust/#:~:text=Revocable%20trusts%20last%20as%20long,and%20after%20you’ve%20passed.