A living trust is a popular estate planning tool that can provide benefits before and after someone’s death. One of the primary advantages is avoiding the probate process. In this week’s blog, we are taking a look at the differences between revocable trusts and irrevocable trusts.
Living Trusts: Defined
A living trust, sometimes referred to as an inter vivos trust, is a trust established during someone’s lifetime. It’s a legal agreement between the grantor/trustor (the person who creates the trust), the trustee (the person who manages the trust), and the beneficiary (the person who benefits from the property in the trust). A living trust goes into effect during the grantor’s lifetime. The named beneficiaries receive any trust property after the grantor’s death. There are two types of living trusts: revocable and irrevocable.
Revocable Living Trusts
A revocable living trust is a trust that can be modified or revoked at any time. Typically, the person creating the revocable living trust will name themselves as trustee and retain control over the property in the trust. The grantor can place additional items into the trust or even name new beneficiaries. In the trust document, the grantor will name a successor trustee who will take over the management of the trust after the grantor passes away. The successor trustee is also responsible for distributing any property to the named beneficiaries.
Irrevocable Living Trust
An irrevocable living trust, by contrast, is a trust that cannot be modified or revoked. Once the grantor places property into an irrevocable living trust, they cannot take the property back or change the terms of the trust. Irrevocable trusts can be useful for specific purposes, such as tax reduction and protection. But these types of trusts require careful planning and management.
Do You Need a Living Trust?
You do not need a living trust, but this legal tool does have a few advantages. First, the person who created the trust can control their assets during their lifetime and then control the distribution of those assets after their death. Second, when someone creates a trust for the purpose of transferring assets to loved ones, a living trust can save them time, money, and unnecessary stress. Unlike a will, which can tie up property for months, property left in a living trust can be transferred almost immediately to the trust beneficiaries. A living trust can help you avoid the probate process.
In Georgia, however, even if you have a living trust in place, you may still need a will to designate a guardian for minor children and account for any property that will be transferred outside of the living trust.
Have Questions? Contact Brian M. Douglas & Associates’ Estate Planning Team
While a living trust does have advantages such as keeping control over your property and avoiding the probate process, this legal tool can have its challenges. Depending on whether you want to create a revocable or irrevocable trust, it is a good idea to work with an experienced estate planning attorney who can explain your options and help create the living trust. Whether a living trust is the right choice for you will depend on your unique circumstances. If you have questions about living trusts or would like to schedule a consultation, please reach out to Brian M. Douglas & Associates at (770) 933-9009 or by using our online contact page. We are always happy to help!