The ability to change is at the heart of the difference between revocable and irrevocable trusts. Revocable trusts take their name from the trustee’s ability to “revoke” (i.e. change) provisions of the trust agreement after signing. These changes could include adding or removing beneficiaries of the trust by amendment or even dissolving the entire trust. Unless a successor trustee is named in the trust agreement, a revocable trust becomes irrevocable upon the death of the person or persons who formed it.
Revocable trusts can be an important tool in estate planning. Like a will, they offer a flexible option in assigning responsibilities and dividing property after one’s death. Unlike a will, however, revocable trusts do not need to be submitted to probate and will remain private. The value and division of one’s estate will not be known and thus not become a source of public speculation or possible family conflict.
Additionally, through the appointment of a successor trustee and a disability clause, a revocable trust can be used to transfer one’s property during life if one should develop dementia or another condition that prevents management of the estate.
Irrevocable trusts, by analogy, cannot be changed after signing; there is no going back on decisions made or property assigned. Irrevocable trusts are more often used near the end of life to assign one’s property to another, thus avoiding estate taxes.
Call our office today to discuss which trust or other financial instrument best suits your estate-planning needs.