If you are planning your estate, you probably have some options for transferring property into a trust. Of course, you may not feel comfortable completely surrendering ownership of your assets. Creating a revocable trust may be the solution.
You can likely form a revocable trust at any point during your life. Before doing so, though, you should carefully consider the requirements, advantages and drawbacks of this type of trust.
Often, forming a revocable trust is straightforward. These trusts usually have three basic parameters:
- You transfer ownership of assets to the trust.
- You act as the trustee, at least initially.
- You retain the flexibility to take property out of the trust.
During your lifetime, you can likely designate a different trustee to oversee your revocable trust. Also, when you die, the revocable trust is likely to become an irrevocable one. In simple terms, irrevocable trusts are not modifiable like revocable trusts.
Avoiding the potentially long and burdensome probate process is often the clearest benefit of forming a revocable trust. Put simply, any of your assets that are inside the revocable trust at the time of your death are likely off limits to the probate court.
While some types of trusts protect your assets from creditors, revocable ones usually do not. That is, your creditors may still go after your assets inside the revocable trust. Doing so, however, typically requires some additional work.
If you are looking to safeguard your assets from the actions of creditors, a revocable trust may not be the way to go. Still, if creditors are not a concern, this type of trust may be a key part of your overall estate plan.