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How do revocable and irrevocable trusts differ?

On Behalf of | Apr 7, 2023 | Estate Planning

A trust is a vehicle you can use in estate planning that allows you to ensure what happens with assets after your death. There are two types of trusts: revocable and irrevocable.

They are quite different, and it is especially important that you make sure you know how each works before choosing to use either.

Irrevocable trusts are permanent

You put your assets in a revocable trust and they become the property of the trust. The trustee will then manage those assets. You do not have control over them after creating the trust. It is a permanent option, but you could make changes to the trust if you get approval from the beneficiary. However, this is not common. Most often, once you create it, it stays the same until you die and the assets disburse to the beneficiary.

Revocable trusts are changeable

Irrevocable trusts work similarly in that you put assets in them, but you maintain ownership and control over them. You can make changes to the trust as you desire. Once you die, the trustee takes over management and makes sure to follow the directions you left on disbursement. You may hear of this type of trust called a living trust since you can make changes and adjust it as needed while you are alive.

Both types of trusts have their place in estate planning. However, you need to be positive you are choosing the correct option, especially if you decide to create an irrevocable trust since you cannot easily change it.