Do you know the difference when it comes to revocable trust vs. irrevocable trust? Are you clear on the terms of each so you can determine which one best fits your needs? This terminology can seem complicated at first, but the basics are rather straightforward once you hear it.
If you select an irrevocable trust, you will never be able to go back and make changes to it. You will never have the option of canceling it (or "revoking") at a later date either, so what you put in the trust is forever sealed. This can be frightening for some people who want to maintain control and the power to make changes, but there are benefits to going this route.
The most lucrative reason to go with this type of trust is to get out of a large portion of estate taxes that would otherwise be due when you pass away. Since you have essentially given away all of the property in the trust, you are not considered the legal owner when you pass away. This in turn means you do not have to pay taxes on that property.
If you guessed that a revocable trust allows you to make changes or even cancel out the trust after it has been legally set, you are correct. This sounds like a great benefit if you expect to be alive for many years to come, but it may not be such a great thing for you.
You are not legally taking the property in the trust off of your estate with this type of trust. That means your beneficiaries will still have to pay the estate taxes on all of the property in the trust when you pass away.
Which one do you think will suit your needs best? Before you decide that, try to get more information on the bigger differences of the revocable trust vs. irrevocable trust. There are some more complicated factors that will make a difference for some people.
