The major advantages of a revocable living trust include flexibility, privacy, avoiding probate and the ability to plan for eventual disability, reports About.com. Irrevocable living trusts protect assets from estate taxes and creditors.Know More
Revocable and irrevocable trusts are set up during the lifetime of the trust's creator, says CNN Money. The creator of a revocable trust can dissolve the trust or change its terms at any time, including the trustees, beneficiaries and assets, according to AARP. Revocable living trusts avoid the time and expense of probate. Additionally, probate proceedings are public court records, but living trusts are private documents. Revocable living trusts also help their creators plan for mental disability by turning over management of the trust to a disability trustee whom the creator of the trust chooses instead of a court-appointed guardian, as reported by About.com.
Because the assets in an irrevocable living trust belong to the trust and not its creator, they are protected from creditors and saved for the beneficiaries of the trust, states About.com. Federal and state governments do not consider irrevocable trusts part of an estate, so the assets pass directly to the beneficiaries without payment of estate taxes. Several types of irrevocable trusts address the specific needs and situations of the creators, according to CNN Money. Credit shelter or bypass trusts pass assets directly to spouses without taxes, generation-skipping trusts save assets for grandchildren or later descendants, and life insurance trusts pass funds from life insurance policies on to beneficiaries without taxes.Learn more about Financial Planning
One of the easiest ways to avoid probate is to create a revocable living trust, which allows the decedent's living family members to transfer property quickly and efficiently. A married couple is able to use a single trust for separate property and co-owned property.Full Answer >
An irrevocable living trust is used in estate planning to reduce the amount of an estate subject to estate taxes by transferring ownership of assets to the trust, reports Bankrate. Different types of irrevocable trusts exist to meet specific estate situations, according to CNN Money.Full Answer >
The first question to ask an attorney when planning for a living trust is whether that lawyer's primary focus is on estate planning, according to About.com. In addition, ask how many years of experience the attorney has and what courses the attorney has taken in estate planning.Full Answer >
The advantages of a living trust are determined by the amount of property owned, and legal expenses related to creating a trust versus a will. In general, large property assets are more suitable for a living trust. Asset privacy is another advantage a trust has over a will.Full Answer >