Revocable vs. Irrevocable Trusts in Tampa
While there are many different types of trusts in Tampa, all trusts fall into one of two categories: Irrevocable and revocable. If you’re new to the world of trusts, you may be unfamiliar with these two concepts. An experienced estate planning attorney in Tampa may be able to explain the differences between irrevocable and revocable trusts in more detail while guiding you toward the most appropriate choice.
It Is Difficult to “Cancel” an Irrevocable Trust
The distinguishing feature of an irrevocable trust is the fact that you cannot easily revoke or “cancel” it. Once you establish an irrevocable trust, it is very difficult to remove it from existence. It is also challenging to alter it. This is why it is so important to carefully plan an irrevocable trust with a lawyer before moving ahead.
A Revocable Trust Is Easier to Change
In contrast, a revocable trust is easier to change. This is why revocable trusts are often called “living trusts,” as they are more flexible and fluid. If you later decide to cancel or alter your revocable trust, you can do so without much hassle. That said, careful planning is still important when establishing a revocable trust.
Why Would Anyone Want an Irrevocable Trust?
Due to its lack of flexibility in certain respects, you may wonder why anyone would even want an irrevocable trust. While these trusts may be more difficult to alter or cancel, they also offer other benefits that make them attractive to certain families. For example, an irrevocable trust has the power to transfer assets out of a grantor’s taxable estate. Irrevocable trusts also offer asset protection benefits if your wealth is being threatened by creditors. In addition, some types of irrevocable trusts could help you qualify for certain government programs or benefits, such as Medicaid.
What Is the Point of a Revocable Trust?
Aside from offering more flexibility, a revocable trust also helps you avoid probate. Florida enforces a fairly costly and time-consuming probate process, and probate avoidance is a key priority for many families. That said, irrevocable trusts also bypass probate. Like irrevocable trusts, revocable trusts also keep the details of your estate private. Revocable trusts often prove helpful when the grantor becomes incapacitated, as the trustee can manage their finances without the need for guardianships or powers of attorney. Some entrepreneurs also use revocable trusts for business succession planning.
Which One Should I Choose?
Ultimately, the most appropriate choice depends on your unique needs and priorities. For example, you might feel wary about setting certain things in stone, and you may appreciate the flexibility of revocable trusts. On the other hand, you may desperately need to qualify for Medicaid or reduce your taxable estate, and this may only be possible with an irrevocable trust.
Can an Estate Planning Lawyer in New Port Richey Help With Trusts?
An estate planning lawyer in New Port Richey may be able to help you learn more about trusts. These attorneys may also recommend certain types of trusts based on your unique needs and goals. Continue this conversation by contacting Knudsen Law and speaking with one of our Seminole estate planning attorneys today.
Sources:
investopedia.com/ask/answers/071615/what-difference-between-revocable-trust-and-living-trust.asp
floridabar.org/public/consumer/pamphlet028/
