Financial trusts can help you plan for your future and provide for the ones you love. However, when you plan to invest in a trust, there will be many options to choose from. However, trusts typically come in two basic structures: revocable and irrevocable. Here we detail the differences between the two so you can make the best choice possible for you and your family.
Revocable trusts
Also known as living trusts, these types of trusts allow the owner to change its terms or even dissolve it at any time. You maintain control of your assets, plus it becomes effective immediately after you sign the necessary documents. Revocable trusts are very similar to wills, with one big exception: you can avoid the probate process that is typically required for wills.
Irrevocable trusts
Unlike revocable trusts, irrevocable trusts cannot be amended once it is created. This is because the assets are moved out of your estate. However, this can provide you with greater protection from creditors and estate taxes. The assets will not be taxed upon death, which can be easier for the benefactor. And if you work in a profession where lawsuits are common (such as the medical or legal industry), an irrevocable trust can protect your assets.
Whether you choose a revocable trust or an irrevocable trust will depend on your financial situation and the goals you want to achieve. At First State Investment, we can help you choose the right type of trust for you and your family. Just contact us today to get started!