There are two primary flavors of living trusts: revocable, and irrevocable.
Revocable trusts are estate planning and asset management tools which can be used to manage your assets during your lifetime. In the event that you become disabled, a good revocable trust will include provisions to manage your assets during your disability by a person of your choosing, according to rules which you have determined in advance. Upon your death, the property held in the revocable trust is distributed to the people you choose (typically a spouse and/or children). They may receive the property outright, or they may get the benefit of the property in their own, separate share trust. A revocable trust, as you may have guessed, may be revoked at any time by its creator, or its terms may be changed, so long as the person who created it is still alive and mentally competent. Revocable trusts are also used to avoid probate of your estate at your death.
Unlike a revocable trust, irrevocable trusts include terms that cannot be changed once the trust has been created. A trust may be designed as an irrevocable trust from the beginning, or it may have started as a revocable trust which by its terms becomes irrevocable. For example, when the creator of a revocable trust dies, it generally converts to an irrevocable trust because the only person with the authority to revoke or change the revocable trust has died.
Some trusts are intentionally designed to be irrevocable from their creation, for a number of reasons. A properly drafted and funded irrevocable trust may be designed to protect assets from creditors, minimize estate taxes, or to manage assets for beneficiaries who or minors or have special needs. As with a revocable trust, assets owned by an irrevocable do not pass through probate at death.
Alabama Estate Planning Attorneys Steve Wiggins and Raley Wiggins with Red Oak Legal, P.C. assist clients in Tuscaloosa, Northport, Brookwood, Moundville, Holt, Eutaw, Greensboro, Marion, Centreville, Carrolton, Reform, Gordo, Livingston, Bessemer, Fayette, Jasper, Montgomery, Prattville, Wetumka, Auburn, Millbrook, Pike Road, Union Springs, and surrounding areas. Contact us today at email@example.com to learn about our free educational workshops on Estate Planning and Asset Protection.