This is a term that is commonly used within estate planning, and it is something you should be familiar with before you approach your attorney. Even if it is not something you will utilize, it will still highlight some of the more important aspects of estate planning. The more you understand now, the less time your attorney will spend explaining it. This translates into a more efficient estate planning process—in terms of both time and money.
First, just a bit of vocabulary for the uninitiated: A trust is an agreement that allows a person to hold assets for the benefit of someone else. The Grantor is the person who creates the trust. With the aid of an attorney, the Grantor designates which beneficiaries will receive their assets. A Trustee manages the trust (for the grantor), and if and when the grantor’s assets need to be distributed, the trustee will do so.
Revocable vs. Irrevocable
The word “irrevocable” means that the person who created it cannot dissolve it. A revocable trust is created so that the grantor can amend or change the trust anytime he or she chooses. After reading that, you are likely thinking that a revocable trust is what you want because of the freedom to change it.
Both kinds of trusts help you avoid the cost and hassle of probate, all while making it easy for those you leave behind when you pass to distribute your assets according to your wishes. However, the irrevocable trust has benefits while you are living that are directly connected to asset protection. By creating an irrevocable trust, you are creating an entity separate and distinct from the grantor. For instance, if the Grantor is sued, the assets in the irrevocable trust are protected. Revocable trusts do not offer this protection.
By choosing an irrevocable trust, your assets will be safeguarded from lawsuits, future creditors, even the cost of long-term care. This is especially important for those with failing health, or those professionals subject to personal liability for their work.
Law Office of Alexander Sherwood Keenan
If you have any questions regarding irrevocable and revocable trusts, contact the Law Offices of Alexander Sherwood Keenan to schedule a consultation. We can help you understand your current estate plan and draft wills and trusts according to your wishes. We also offer free seminars to help you understand the complexities of estate planning. Call us today at 845-345-2123 to learn more about our complimentary workshops.