There are two types of Living trust

• Revocable  Trust
• Irrevocable Trust

What is a revocable trust?

A revocable living trust makes it possible for the trust created to be altered or canceled at any time the grantor deems fit. With a revocable trust, any income earned during the life of the trust is distributed to the grantor. This means that it is only upon the demise of the grantor can the property be transferred to the beneficiaries.

With a revocable trust, the asset held by the trustee for the beneficiaries acts as the principal of the trust. This principal can change often as a result of a trustee’s expenses or as a result of the asset’s depreciation or appreciation. A typical revocable trust lists one or more beneficiaries and typically avoids probate. This type of trust comes with advantages

Advantages of Revocable Trust

• A revocable living trust provides flexibility. Decisions that were made by a grantor can be changed at any time
• With a revocable Living Trust, a grantor is able to change or adjust the provisions of the trust and earn income
• A revocable living trust also makes it possible for the living grantor to terminate the trust in all its entirety
• If a beneficiary is a minor and hence cannot hold property in his or her name, the revocable living trust makes it possible for the minor’s asset to be held in the trust rather than having a court appoint a guardian
• If a grantor has doubts about how a beneficiary would handle an asset, a revocable trust provides a provision where a set amount of money is distributed to the beneficiary rather than leaving the beneficiary with the asset
• If a grantor owns properties outside his state, with a revocable trust, ancillary probate is avoided.

Developing a revocable trust, however, requires the skill and expertise of professional attorneys. This type of trust involves a lot of time and effort as assets must be retitled in the name of the trust. The grantor’s estate plan should also be monitored annually and closely to ensure that the trust’s objective is met. This is to avoid probate. Our top-notch professional attorneys at Trust legal center, Orange County, CA would guarantee seamless estate planning for you to prevent any form of probate.

What is an irrevocable trust?

An irrevocable trust, on the other hand, is a direct opposite of the revocable trust. Once an irrevocable trust is signed and sealed by the grantor, the content of the trust cannot be changed, amended, modified, or terminated without the permission of the beneficiaries named by the grantor. Once a grantor signs, this means that he or she has transferred all ownership of assets into the trust. This automatically removes all of their rights of ownership to the assets and to the trust.

A lot of individuals prefer Irrevocable trust because of estate and tax considerations.  This type of trust removes the trust’s assets from the grantors’ taxable estate i.e. the total value of the grantor’s assets that are subject to taxation upon the demise of the grantor.

Setting up any kind of trust can be a bit overwhelming. You would definitely need the aid of experienced attorneys to enable you to go through this process seamlessly. An irrevocable trust might be rigid in that its content cannot be modified but it allows for flexibility in terms of trust management and distribution of assets.

Another key instrument in estate planning is the will. A will is more popular than the trust because a lot more people draft wills and are more aware of this as a means of sharing assets.