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Comparing irrevocable and revocable trusts

On Behalf of | May 10, 2024 | Estate Planning

A thorough Texas estate plan extends beyond simply having a will. If you are estate planning and you wish to add stipulations that will better protect your assets, you may wish to include a trust in your plan. Using a trust gives you more control over use of your assets and helps prevent your beneficiaries from spending irresponsibly. If you believe your estate plan could benefit from the addition of a trust, it’s important that you’re aware of the differences between irrevocable and revocable trusts.

Irrevocable trusts

An irrevocable trust cannot be changed or revoked. This means you must thoroughly evaluate your plan before making it official because changes can only be made in very limited circumstances with permission from all beneficiaries or a court decree. Irrevocable trusts prevent your assets from being subject to estate taxes after your death.

When you include an irrevocable trust in your estate plan, you have more protection over your assets. An irrevocable trust can be used to keep your assets safe from lawsuits, which is beneficial if you work in an industry where being sued is a common risk. You can select a trustee of your choosing to oversee the distribution of your assets, which can give you peace of mind that your wishes will be carried out.

Revocable trusts

A revocable trust, also called a living trust, can be changed easily. This can work well for those who may be concerned about leaving assets to future grandchildren or protecting adult children from losing assets in a divorce.  When you include a revocable trust in your estate plan, you can choose your beneficiaries but have the option to change those beneficiaries any time if your family grows or undergoes any type of major change.

Revocable trusts do not shield your assets from creditors. If you’re sued, you could be ordered to liquidate those assets to pay a judgment. The assets in a revocable trust are also subject to state and federal estate taxes upon your death.

Assistance with estate planning

Creating a thorough estate plan can be a complicated process, and it must occur according to Texas laws to be valid. Everyone’s needs and wishes are unique, which is why it’s important to understand all your options when it comes to choosing between an irrevocable or revocable trust. You may benefit from professional assistance when creating your estate plan so you’re fully aware of your options and can make informed decisions on how best to plan for your family’s future.

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