Do you need a revocable trust or an irrevocable trust? One gives you control, the other gives you protection. I’m Sarah Siedentopf. Which one do you need? I’m an estate planning attorney in Atlanta, Georgia.
Most people need a revocable trust. It’s control. It allows you to make a plan for what’s happening with your assets both during your lifetime in case of incapacity and after you’ve passed away, making sure that the right people are in charge, that we are avoiding probate and the court processes and waiting periods, that the correct beneficiaries are getting what you want them to at the right times. That any assets that you want to be managed by a trustee, while the beneficiaries become old enough or wise enough to receive them, you can make that happen. So the revocable trust, you can make changes to it, you can make updates to it, you can take things in and out of it. Very, very flexible.
On the other hand, irrevocable trusts are almost always very, very specific and you can’t make changes to it. Most of the time because of what the plan is, you can’t be the trustee during your lifetime. So we are locking up assets, essentially choosing who should be in charge of them and what the circumstances are and handing them over and being done with it. So some examples of irrevocable trusts, a life insurance trust. This is a type of trust that allows you to gift life insurance out of your estate so that it’s out of your estate at the time that you pass. This can be important if you’re concerned about having to pay estate tax and if the exemption is not high enough.
Another type of irrevocable trust is an asset protection trust. Now, Georgia is very creditor friendly. We don’t have standard asset protection trusts in Georgia. We can go out of state, Tennessee has great asset protection trusts and I’m licensed there. But there are also asset protection trusts that essentially are gifting. We are either putting things into a trust and allowing a trustee to manage it and turning over that control to get some creditor protection, or we’re gifting away assets to get that same creditor protection. These things are permanent, so it has to be well thought out and really appropriate to your situation.
Another type of trust is a supplemental needs trust if you’ve got a family member who has the need to maintain their eligibility for needs-based government programs, those types of trusts do require that they be irrevocable. So we can put things into them and only certain people are in control. Certain people can access them for only certain reasons and it can maintain that eligibility in certain circumstances.
The vast majority of people are thinking about revocable trusts. You can make changes to it. You can move things in and out. It’s see-through from a tax status, so there’s no extra tax filings until you’ve passed away. It allows you control and is incredibly seamless to your life. In certain situations, an irrevocable trust can meet particular needs in particular circumstances. So they are, you know, not interchangeable in any way, shape, or form because there are different benefits that you get and certain things that you are looking for may require one or the other.
But the vast majority of people do benefit from a revocable trust. There are only certain circumstances when we actually have to lock things down and turn control over to someone else. So if you’re thinking about trusts, please give me a call. I would love to help you figure out which is the correct one for you. And also, please be comforted that in most situations you’re not giving away any control during your lifetime to anyone other than yourself.
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