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What is a revocable trust?

On Behalf of | Sep 11, 2023 | Estate Planning

Deciding how to set up your estate plan is a major decision. You have several different tools to consider when you’re setting up this plan. Among these tools is a revocable trust. This option differs from irrevocable trusts because of its flexibility. Some people refer to the revocable trust as a living trust.

Unlike other trusts, a revocable trust is unique because its terms can be changed, modified or even wholly revoked as long as you’re alive. The adaptability of this trust means it can evolve with the changing circumstances of your life, making it a preferred choice for many.

Diving deeper into the benefits

One of the standout advantages of a revocable trust is its ability to bypass the probate process. Assets placed within this trust can be transferred to beneficiaries without this often time-consuming process.

There’s also an inherent privacy with revocable trusts. Unlike wills, which can become public knowledge, the details within a revocable trust remain private. This can protect the beneficiaries, which is important, especially in larger estates.

Are there any downsides?

While the advantages might make it seem like a go-to option, there are some considerations. Setting one up might be pricier than other asset management alternatives. Another downside to a revocable trust is that it doesn’t offer protection from creditors, so the contents can be claimed if you’re sued. Also, while it might sidestep probate, estate taxes aren’t necessarily reduced.

Making informed decisions ensures that one’s assets are managed effectively and according to their wishes. Working with someone familiar with your circumstances who can help you determine the best options for your needs is beneficial.