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Why choose an irrevocable trust over a revocable one?

On Behalf of | Jul 1, 2019 | Uncategorized |

As Georgia residents prepare their estates and put into place a plan for after they die, many opt to put some assets in a trust. There are two types of trusts. A revocable trust is on that can be altered any time after it is set up. An irrevocable trust cannot be changed at all once it is formalized. Under these conditions, it is difficult to see a time when you would choose an irrevocable trust over a revocable one, but there are benefits that help with the decision.

According to Investopedia, a trust is designed to give someone else control of your assets and your estate after you die. You can set certain conditions on the trust so that your beneficiaries do not receive their part until they are a certain age, have completed school or are at a point you set for the trust. While a revocable trust can be changed, there are certain disadvantages that make it less than ideal.

A revocable trust is subject to any judgments made against you or your estate. If you are sued and your estate does not cover the debt, money can be taken from the trust to pay for the judgment. Revocable trusts are also subject to certain taxes that irrevocable ones are not.

In an irrevocable trust, you give up all rights of ownership to your estate and all assets placed in the trust. If you have a very large estate, this type of trust can help decrease your tax liability after you die as any property transferred to the trust is not counted toward the estate’s gross value. An irrevocable trust is also protected from anyone who comes after your money with a lawsuit after you die.

There are two types of irrevocable trusts, testamentary trusts or living trusts. To determine which one is right for your situation, it may benefit you to speak to an attorney.

This information is for educational purposes and should not be interpreted as legal advice.