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What is the purpose of making an estate plan?
The purpose of making an estate plan is to ensure that your assets are distributed according to your wishes and to provide for the financial security of your loved ones after your death. An estate plan can also help to minimize taxes and other costs, such as probate fees, and ensure that your wishes for medical treatment and financial matters are carried out in the event that you become incapacitated.
Estate planning can involve a variety of legal documents and strategies, such as a will, trust, power of attorney, and advance medical directive. These documents can help you to specify your wishes and appoint someone to manage your affairs in the event of your death or incapacitation.
Creating an estate plan can be a complex process and it is important to work with an experienced estate planning lawyer to ensure that your plan is tailored to your unique needs and goals. An estate plan can provide peace of mind by giving you control over what happens to your assets and loved ones after your death.
What is a revocable trust?
A revocable trust, also known as a living trust, is a legal arrangement in which a person (the grantor or settlor) transfers ownership of their assets to a trustee to hold and manage for the benefit of designated beneficiaries. The grantor retains the right to amend or revoke the trust at any time while they are alive and competent.
From a lawyer’s perspective, revocable trusts can be a useful tool for estate planning because they allow the grantor to retain control over their assets while also providing for the smooth transfer of those assets to their beneficiaries after their death. Revocable trusts can be particularly useful for avoiding probate, which is the legal process of transferring a person’s assets after their death. Probate can be time-consuming and costly, and a revocable trust can help to avoid this process by allowing the assets to pass directly to the beneficiaries.
Revocable trusts can also be useful for managing assets in the event that the grantor becomes incapacitated. The trust can specify how the assets should be managed and used for the benefit of the grantor during their lifetime, and can also provide for the management and distribution of the assets after the grantor’s death.
It is important to work with an experienced estate planning lawyer when creating a revocable trust to ensure that it is properly drafted and meets your needs and goals.
What is the difference between revocable and irrevocable trust?
A revocable trust, also known as a living trust, is a type of trust in which the grantor (the person who establishes the trust) retains the right to amend or revoke the trust at any time while they are alive and competent. This means that the grantor can make changes to the trust or dissolve it entirely if they wish.
On the other hand, an irrevocable trust is a type of trust that cannot be amended or revoked once it has been established. The grantor gives up their right to make changes to the trust or dissolve it, and the trust’s assets are typically no longer considered to be part of the grantor’s estate.
There are a few key differences between revocable and irrevocable trusts:
- Control: With a revocable trust, the grantor retains control over the trust assets and can make changes to the trust at any time. With an irrevocable trust, the grantor gives up control over the trust assets and cannot make any changes to the trust.
- Tax implications: Revocable trusts typically do not have any tax consequences, as the assets in the trust are still considered to be part of the grantor’s estate. Irrevocable trusts, on the other hand, may have tax consequences, as the assets in the trust are typically no longer considered to be part of the grantor’s estate.
- Probate: Assets in a revocable trust may still be subject to probate (the legal process of transferring a person’s assets after their death) in some circumstances. Assets in an irrevocable trust, on the other hand, are typically not subject to probate and can pass directly to the beneficiaries upon the grantor’s death.
It is important to carefully consider the differences between revocable and irrevocable trusts and to work with an experienced estate planning lawyer to determine which type of trust is right for your needs and goals.
Written by
Bret Thurman
