All adults should have an estate plan that outlines their wishes for their assets after they pass away. This can be done using a will, but that doesn’t provide as much protection as another option—trusts.
Trusts are a legal tool that hold assets while you’re living and distribute them according to your wishes after you die. There are two primary categories of trusts, revocable and irrevocable.
Differences between revocable and irrevocable trusts
The primary difference between revocable and irrevocable trusts is the permanency. You can change the terms of a revocable trust when you feel the need. An irrevocable trust is more permanent because you can’t change it without permission from the trust’s beneficiaries or the court.
An irrevocable trust provides even more protection than a revocable trust. When you create an irrevocable trust, the contents are controlled by a trustee. You don’t have control over the assets, so they’re protected from your creditors. This can help to preserve wealth to pass down to your beneficiaries.
Trusts also provide privacy for your beneficiaries. They don’t have to go through the probate process, so there’s no public record of the terms. Additionally, trusts can get your beneficiaries their inheritance faster.
Creating a comprehensive estate plan is the only way that you can ensure your loved ones have a path to follow when you die. This can include several different components. It may be beneficial to work with someone familiar with creating estate plans so they can guide you on setting up something that works for your situation.