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What are the two main types of living trust?

On Behalf of | Jun 8, 2021 | Estate Planning |

Having multiple tools at your disposal while estate planning helps ensure that your estate gets through probate quickly after you die. In fact, there are even certain tools at hand that will allow your heirs to bypass probate entirely in some instances.

Living trusts should be a cornerstone of your estate plan, just as much as a will is. Living trusts are extremely powerful and allow you to take true control of your estate. According to Experian, the two major varieties of living trusts are revocable and irrevocable.

What is a revocable trust?

When you create a revocable trust, anything inside of that trust remains your property until you die. Once you die, anything that you put into a revocable living trust will then go to your heirs without needing to go through probate.

Avoiding probate is one of the reasons why revocable living trusts are so popular. Additionally, many feel more comfortable retaining personal ownership of their assets, which is in stark contrast with what happens with an irrevocable trust.

What is an irrevocable trust?

With an irrevocable trust, anything that you put into it becomes the legal property of the trust. You cannot make any changes to an irrevocable trust once you sign off on the paperwork. The benefit of an irrevocable trust is that anything that you put into an irrevocable trust the government cannot subject to estate taxes.

All estates are unique, and estate planning can be complex. Building a custom estate plan using wills and trusts helps ensure that the law fully carries out your final wishes regarding your property.