Revocable Living Trusts vs. Irrevocable Trusts
Living trusts ensure your assets go where you wish when you are living, and a trustee oversees it according to the guidelines. Assets not named in the trust usually have to go through probate which can take several months. You may come across many different kinds of trusts, but irrevocable and revocable trusts are two primary types.
Revocable Living Trusts
Living revocable trusts in estate planning, sometimes called inter vivos, can be modified and even include out-of-state beneficiaries and trustees. The main benefits are you have someone acting on your behalf if you can’t, and any generated income from assets still goes to you. The assets pass directly to the beneficiaries.
Since you still own the property, it is subjected to taxes, creditor liens and lawsuit judgments. However, since trusts records are commonly not public, the creditor may have a harder time finding assets.
Irrevocable trusts cannot be amended once you place assets or funds into them. Unlike a revocable trust, you don’t have any legal rights over the trust.
The main advantage of irrevocable trusts is since all ownership has been removed, you help the beneficiary avoid estate taxes from income the assets earn. However, if you serve as trustee, you don’t get the tax benefits. It also protects your assets from creditors and lowers your net worth to increase chances of qualifying for government benefits.
You have to ensure any new assets acquired you wish to include in the revocable trust goes into them to avoid probate. Setting up trusts and managing them by a trustee other than yourself does not come free. Beneficiaries can still challenge a revocable trust.
You should also understand tax implications, such as gift tax and estate tax for property transfers. This makes hiring an estate planning lawyer in Las Vegas a sensible investment to prevent surprises.