What is a trust?
“Sometimes known as ‘will substitutes,’ revocable and irrevocable trusts are tools that you can use to help ensure your wishes are carried out, protect disabled beneficiaries, help children spend/budget properly, protect assets from creditors or a spendthrift, promote family harmony, etc.,” says Terry Chier, director of Personal Trust and Estate Settlement at Thrivent Trust Company.
And they are not just for people with lots of assets; trusts can be used by anyone.
What’s included in a trust document?
Generally, a trust document includes the name of the person(s) who created it [known as the grantor(s) or settlor(s)], the names of the
What are revocable trusts?
What are irrevocable trusts?
What are the key considerations for each type of trust?
Advantages of a revocable trust include its flexibility (i.e., revocable, changeable, etc.), Chier says, and the fact that its assets remain under the control of the grantor/trustee. Revocable trusts are private, meaning their details won’t become publicly known after the death of the settlor.
Disadvantages include the initial cost of having an attorney draft the trust, as well as the time and cost of reregistering your property in the name of the trust. Revocable trusts should be reviewed and amended as circumstances change.
Advantages to creating irrevocable trusts include protecting assets from creditors and spendthrift beneficiaries. They can be used to help preserve eligibility for government programs for
A disadvantage is implied in the name itself, in that it is irrevocable. Additionally, once transferred, you will effectively lose control over the assets placed in the trust.
It’s recommended that when considering a trust, you seek guidance from a tax or estate attorney.