Creating an estate plan is a crucial part of preparing for the future, and it involves choosing tools that will protect your assets and simplify the distribution of your property for loved ones. Trusts are some of the most powerful tools used during estate planning, but many people misunderstand the different types. For more information on the difference between a living and a revocable trust, continue reading below. Secure the help of a skilled Middlesex County trust lawyer for assistance with your estate planning needs.
What is a Trust?
Put simply, a trust is a fiduciary arrangement that owns assets transferred to it. The legal entity can hold assets, like money and property, to create a relationship where the grantor (the person who creates the trust) transfers assets to a trustee to manage them on behalf of beneficiaries.
What’s the Difference Between a Living Trust and a Revocable Trust?
In many cases, a living trust is a revocable trust. The term “living trust” refers to a trust created during your lifetime that holds and manages assets for beneficiaries according to your instructions. You transfer property, like a home, bank account, or investments, into the trust, and the trustee (often you, while you are alive), manages those assets.
A revocable trust is a type of living trust that you can change, modify, or cancel at any time. You stay in control of your property and can add or remove beneficiaries, change the terms, or dissolve the trust entirely whenever you want.
A living trust is simply the type of entity created, and a revocable trust refers to how it is controlled and your ability to change or cancel it. A living trust can be revocable or irrevocable.
What is an Irrevocable Trust?
An irrevocable trust is one where the grantor gives up control of the assets that are transferred into the trust. While the grantor can alter the terms of a revocable trust or change beneficiaries at any time, irrevocable trusts generally cannot be modified or terminated unless specific circumstances apply.
What Are the Benefits of a Trust?
Trusts offer several advantages that wills do not. For example, a trust allows your assets to avoid probate, the process used to settle an estate. Probate court can be slow, expensive, and public. Holding your assets in a trust allows you to bypass that process, meaning your beneficiaries can access funds and property faster, there will be lower court and legal costs associated with the process, and your family can enjoy more privacy.
Both revocable and irrevocable living trusts benefit from this, as any assets titled in the name of a trust can avoid probate. If you have questions or concerns about your estate planning, do not hesitate to contact a skilled attorney at Mark Liam Gannon, Attorney at Law, today.
