Some people contemplate setting up a trust when they reach or are near retirement age. The process can be quite complex, though. You will also need to decide between a revocable trust and an irrevocable trust. You would be wise to involve a probate lawyer if you aren’t clear about the difference.
Revocable Trust and Irrevocable Trust Explained
With a revocable trust, you have the flexibility to make changes at any time. This includes transferring property and assets, undoing a transfer, or terminating the trust altogether. A revocable trust, though, does become irrevocable in the event that you die or are no longer able to competently make your own decisions.
An irrevocable trust is the opposite. This means once the trust is established and signed, you relinquish all control. Changes can only be made with the permission of the trustee and the beneficiary.
The Trusts’ Effects on Estate Taxes
At first glance, a revocable trust may seem more beneficial, since you retain control. However, an irrevocable trust holds one major advantage. When you place property in an irrevocable trust, you are no longer the legal owner of that property. This means it’s not a part of your estate’s value and therefore not factored when determining whether you owe estate or death taxes. In a revocable trust, you still own the property since you can remove it from the trust at any time. This means you are still subject to all the taxes that go with it.
If your estate’s value is below a set threshold, though, then it may already be exempt from federal estate tax. In this instance, an irrevocable trust may not be necessary.
Let a Probate Lawyer Help You
If you’re setting up a trust, then let Curtis & Casteel Law Group help you along the way. Both types of trust have their respective pros and cons. Our lawyers are versed in real estate and business law in Lynnwood, and we can help you make an informed decision between a revocable trust and irrevocable trust.
Edited by Justin Vorhees
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