When it comes to Living Trusts you will find that there are basically two types, a revocable and an irrevocable. If someone creates an irrevocable Living Trust the purpose is usually to provide some protection for the assets in the trust and to get some relief from taxes. This type of trust is common used for the benefit of the person that created the trust.
The revocable Living Trust does not provide the same type of asset protection, and in most cases the purpose of the trust is for the protection of others, as well as to avoid probate. The reason that the irrevocable trust provides more asset protection is due to the fact that the trust creator gives up most if not all control of the assets in the trust. This isn’t true of the revocable Living Trust.
With the revocable Living Trust, the trust creator has access to the assets in the trust whenever they choose. They can add to the trust, take assets out of the trust, and modify it. This trust will not provide any benefit when it comes to reducing estate taxes, plus it does not protect your assets in the event that you need Medicaid to cover long term care expenses. It will allow your assets to pass to your heirs outside of probate proceedings, which is the main reason why people use this type of trust.
The terms of either the revocable or irrevocable trust can be much the same as a will. You can name your beneficiaries and it will be these people that inherit these assets at your death. You can even put terms in the trust that would keep the assets in trust throughout your beneficiaries’ lifetimes, this way their inheritance is protected from debt collectors and divorce.
The type of trust that is best for you will depend on your own unique circumstances and preference. To find out more about how a Living Trust can help you, it is best to get legal advice from an attorney that is experienced in estate planning.
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