Personal injury

Revocable Trusts Vs Irrevocable Trusts

Overview

Trusts are important tools in estate planning. Two common types of trusts are revocable trusts and irrevocable trusts. Understanding the differences between these two can help you make informed decisions when planning your estate.

Revocable Trusts

A revocable trust, also known as a living trust, allows you to retain control over the assets placed in the trust during your lifetime. You can make changes to the trust or even revoke it altogether if needed. This type of trust is flexible and can be modified as your circumstances change.

Benefits of Revocable Trusts

  • Flexibility in managing assets
  • Privacy, as the trust avoids probate
  • Ability to provide for incapacity

Irrevocable Trusts

Unlike revocable trusts, irrevocable trusts cannot be modified or revoked once established. The assets placed in an irrevocable trust belong to the trust itself, not to the individual who created it. This type of trust is often used for specific purposes such as asset protection or tax planning.

Benefits of Irrevocable Trusts

  • Asset protection from creditors
  • Tax advantages
  • Preservation of assets for beneficiaries

FAQs

1. Can I change the terms of a revocable trust?

Yes, you can amend or revoke a revocable trust at any time during your lifetime as long as you have the mental capacity to do so.

2. Are irrevocable trusts permanent?

Once an irrevocable trust is established, it generally cannot be changed or revoked. However, certain limited circumstances may allow for modifications under court supervision.

3. Which type of trust is more suitable for estate tax planning?

Irrevocable trusts are often used for estate tax planning due to their ability to remove assets from an individual’s taxable estate.

Choosing the Right Trust for You

Deciding between a revocable trust and an irrevocable trust depends on your specific goals and circumstances. Consulting with an experienced estate planning lawyer can help you navigate the complexities of trust planning and make informed decisions.

Contact Wright Street Lawyers for Trust Planning

If you need assistance with setting up a revocable trust or an irrevocable trust, contact Wright Street Lawyers in Adelaide, South Australia. Our team of experienced lawyers specialises in family law, estate planning, probate, and criminal defense. We can help you create a comprehensive trust plan tailored to your needs.