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Is a revocable trust or irrevocable trust better for you?

On Behalf of | Jan 30, 2025 | Estate Planning

Trusts can be a very useful part of an estate plan — allowing you to protect the assets in them. There are two main types to know about, each with different advantages and disadvantages. These are revocable trusts and irrevocable trusts.

It’s not a case of whether one is better than the other. Rather, it is about which is the most suitable for your needs.

Revocable trusts

If you want the most flexibility, this can be found with a revocable trust. You can make changes or dissolve the trust altogether if you change your mind about things in the future. The problem is that this flexibility comes at the cost of less protection for your assets.

If you die owing money, creditors may seek to claim against your estate. The executor of your estate has to settle any qualifying debts before they can pass what is left to your beneficiaries. Putting assets into a revocable trust will not protect them from these claims.

Irrevocable trusts

If you want the highest level of protection for your assets, then an irrevocable trust may be the better option. Creditors will not be able to touch any of the assets you put in a revocable trust if you owe them money when you die. The executor will be able to distribute the full amount of the assets to your beneficiaries according to your instructions.

The major downside to irrevocable trusts is their lack of flexibility. You need to be sure to get it right the first time when setting them up or moving assets into them, as you cannot undo your choices. Assets that are in there will stay in there.

As you can see, it’s complex. Experienced legal guidance can help you learn more and make appropriate choices for your estate plan.

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