DISTRIBUTION OF ASSETS AND WHICH TYPE OF TRUST IS PREFERABLE
For people, there is often a question as to whether a revocable trust or irrevocable trust is preferable when planning for the future. It's one of the most common considerations when considering trust administration and there are numerous aspects to each that must be understood before a decision is made. Depending on the individual circumstances, both have advantages and disadvantages.
The trust is meant to ensure an easy process of transferring assets to heirs. For some, the main focus is on tax issues. For others, the goal is to provide protection for assets. Before deciding on whether to use a revocable trust or an irrevocable trust, the amount of control the person wants is paramount. People for whom distribution of assets is not expected to be an issue, these trusts might be more work than is necessary.
The key to the two types of trusts is knowing how they function and what the rules are. A revocable trust can be changed at any time. The irrevocable trust puts the decision-making power in the hands of the trustee. The main idea of a revocable trust is to be prepared for the eventuality of no longer being able to handle personal affairs. With this kind of trust, after death, the decedent will have their wishes adhered to. Irrevocable trusts are commonly recommended for those who have significant assets to worry about or if assets need to be shielded from creditors.
Regardless of the type of situation a person faces, the biggest key to deciding which type of trust to use is having the knowledge as to what's best for the individual and his or her family. If there are tax concerns, major assets, properties or a business, having the proper legal guidance can make the entire process smoother. Those who are unsure as to how they should proceed need to know the benefits and disadvantages of their various choices.
With a revocable trust and an irrevocable trust, the person who is taking the steps to shore up their financial future even after they're gone needs to know the legal ramifications of what they're doing. In order to have a handle on the multiple issues they'll be dealing with and how it can affect their heirs, speaking to an attorney experienced in financial issues is a wise decision.
Rignanese & Associates is available to work with clients on their legal needs. Please reach out to us at 863.294.1114.
On behalf of Kelly Kennedy of J. Kelly Kennedy, Attorney/CPA, PLLC which has been acquired by Rignanese & Associates, PLLC.
Source: U.S. News & World Report, "How to Choose Between a Revocable and Irrevocable Trust," Joanne Cleaver, June 19, 2014